CEO Asha Sharma has discussed the major restructuring currently underway at Xbox in a new interview with Fortune. It could be painful to watch, and even more so for those affected by the layoffs, but it was presumably all necessary. I’m still a bit shell-shocked that some Xbox studios reportedly had as many as 14 layers of management, an absurd number that Sharma is now capping at no more than five.
Sharma told Fortune: “In order to grow, we made a bunch of bets … and as we did that, we inherently didn’t focus on the core business… The number one measure of your strategy is what you put your resources behind, and we simply spread ourselves too thin.”
The interview also revealed new details about Xbox’s strategy moving forward, as Fortune explains: “The unit’s new plan centers on returning focus to its flagship Xbox console, which represents 80% of its business, funneling its content budget toward high-growth areas such as the Minecraft game, and stepping away from smaller studios.“
Despite Xbox’s efforts to broaden its audience through the “This is an Xbox” campaign, it appears the console remains the foundation of the business, accounting for 80% of Xbox overall. If anything, the latest restructuring suggests Microsoft is refocusing on the audience that has supported the brand from the beginning.
As I said, I think many of these changes were necessary, despite my own frustrations and what I still believe was a mistake in letting State of Decay 3 leave alongside Undead Labs. That said, Sharma revealed that Xbox was losing 64 cents for every $1 it invested in its studio strategy. In other words, it wasn’t even breaking even, and that’s simply not sustainable for any profit-driven company.
Xbox has, in many ways, backed itself into a corner. I always felt Sharma would eventually have to make some incredibly difficult decisions, as that’s ultimately what she was brought in to do. As much as this situation is awful for everyone affected, I’m still hopeful Xbox can get back on track.
While the company itself appears to be stepping away from smaller studios, I hope it doesn’t stop investing in independent developers. Some of the industry’s most creative and successful games have come from indie teams, and they’re clearly a gold mine of great content.
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