XBOX Game Pass is stuck at 30 million users: the service hasn't grown for a long time

The Game Pass push didn’t hit the targets that had been set, and the fallout is forcing a blunt, fast rethink. What began as an aggressive growth play now looks like a retrenchment.

Asha Sharma, who runs the division, has been candid about the depth of the problem: operating margins are far below market norms — a gap that can’t be papered over by spin. The subscription-and-multiplatform bet produced some momentum, but not nearly enough to offset the mounting costs.

Behind the headline numbers are familiar frictions: headcount that outpaced the business’s immediate needs and a hardware slump so severe it’s being called the sharpest in the industry’s recent memory. In the corridors, people talk in shorthand — eg., “we overspent, then demand dropped” — and the awkwardness is obvious.

Leadership has moved quickly. Plans include cutting roughly 15% of staff (i.e., a significant reduction) and parting ways with four studios. A stringent reorg is underway; the rationale is operational, not inspirational, and the coming months will show whether the fixes were the right ones.