On Sunday, Microsoft put on its annual summer showcase at the Los Angeles Academy Museum of Motion Pictures to hype up the games coming in the year ahead: a Halo remake, a Gears of War prequel, a new action game starring Senua. At the showcase, new Xbox CEO Asha Sharma announced that fans with special badges at the event—all of whom paid their own way to Los Angeles and surely own an Xbox—will get a free limited edition Xbox Series X console.
On Wednesday, an open letter to Xbox employees titled “Xbox Reset” warned that the business is “currently unable to make as many consoles as players want to buy,” and that the company “over extended” in its studio acquisition spree over the last few years. The casual tone of the message being signed “Asha and Matt” is a poor match for what it signals:
This month was the time for Asha’s first big giveaway. Next month it will be time for Asha’s first big layoffs.
It’s long felt futile to point at the obvious hypocrisy of, say, giving away a bunch of consoles while complaining you can’t manufacture enough to meet demand, while your parent company itself creates the conditions leading to the current “hardware component crisis,” as Matt and Asha call it.
Those in charge can handwave that criticism away: ‘It wasn’t that many systems, really.’ Or ‘this fiscal year’s budget is already set; it’s next year’s where we have to tighten our belts.’ Or ‘you gotta spend money to make money, right?’
The act of running one of these multibillion-dollar companies requires fully committing to—if not actually believing—the Orwellian doublespeak of it is the best of times and also it’s time for hard choices. Or in the precise words of Asha and Matt’s “Next 100 Days: Xbox Reset,” they are poised to “build the #1 gaming and entertainment company” even though Xbox’s “current platform infrastructure is not built for the battle ahead,” it hasn’t “adequately funded [its studios] to compete and win,” and its hardware costs are now “over 5x the prices” it paid just two years ago.
The game developers working at the Xbox studios Sharma seems poised to lay off at the start of the fiscal year in July will surely appreciate the acknowledgement that they created “industry-defining franchises that have enormous potential and player demand,” even if the publisher didn’t adequately invest in them. It’s not you, it’s me is a famously well-received consolation.
Xbox flip-flopping on console exclusives, asking fans on X.com whether it should capitalize its name, and talking about “empowering new types of games” that can survive the RAMpocalypse all suggest a desperate flailing in search of a plan. But the plan for more cuts was surely preordained from the start of Sharma’s first 100 days—as noted in today’s letter, the division is making a mere 3% profit margin, a fact Asha and Matt did not just learn today.
That’s a bad number! Unless you consider it in the context of the $32 billion in profit that Microsoft as a whole raked in just last quarter, in which case the idea of Xbox being in dire straits seems just as imaginary as the letter concluding on the feel-good back pat about Xbox creating “one of the few places where people come not just to play, but to connect with others to create memories.”
Every we hear you missive to the fans is just spin for the brutal reality that the mandate for higher profits will mean more misery for studios Microsoft failed to safeguard.
Sharma was not hired to make brilliant decisions and redirect overnight the lumbering vessel that is any giant corporation changing strategies. She was hired to keep up a convincing smile while serving one pre-wrapped shit sandwich after another, and we’re all stuck at the buffet.
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