Xbox Boss Acknowledges Another Rough Quarter As Microsoft CEO Says The Company Needs To ‘Win Back Fans’

New Xbox boss Asha Sharma has been working quickly to fix the broken vibes around the platform. That’s included new messaging, but also substantive changes like making Game Pass cheaper. It’s a long road ahead, though, and Microsoft’s latest earnings report showed just how much work the team has cut out for it as it tries, in the words of CEO Satya Nadella, “to win back fans.”

Xbox hardware fell 33 percent year-over-year last quarter, which is in line with previous declines for actual sales of the Xbox Series X/S. Xbox content and services revenue was also down 5 percent year-over-year, which CFO Amy Hood blamed on a stronger quarter the year prior, likely from much stronger momentum around Call of Duty Black Ops 6 than Black Ops 7. Despite every pivot and new initiative this generation, Microsoft’s gaming business is still headed in the wrong direction.

Sharma didn’t shy away from the challenge. “While we have made progress expanding the business and our margins, player and revenue growth has not yet met our ambition,” she wrote on X, now more than two months into her tenure after replacing Phil Spencer. “We know we have work to do to earn every player today and into the future.”

While Sharma touted progress on profit margins, likely due in part to cuts last summer and the steady stream of Xbox ports to PlayStation 5, Nadella touted new records “during the quarter” for monthly Xbox active users and total game streaming hours. But he also didn’t shy away from the way Microsoft’s consumer-facing side of the company, including gaming, has gone off the rails.

“When it comes to our consumer business, we’re doing the foundational work required to win back fans and strengthen engagement across Windows, Xbox, Bing, and Edge,” he said during the earnings call. He later pointed to Game Pass specifically. “You also see this in Xbox, where the team is recommitting to our core fans and players and shaping the future of play,” Nadella continued. “Last week’s Game Pass changes are one example of how we are staying responsive to customer feedback.”

It’s a clear shift from the previous tone on these calls, and markedly different from the confidence projected in the years immediately following the Activision Blizzard acquisition of a gaming platform that was on the right track. It’s still unclear what exactly the next phase of Xbox will look like, however. It could be a deep overhaul, which some fans feel is needed for a long time, or just a recalibration that achieves better KPIs.