Xbox has had a rough year by anyone’s measure. A $1.7 billion revenue drop, thousands of layoffs, studios shutting down, and a leadership overhaul that pushed out one of gaming’s most recognizable faces. Now, Xbox CEO Asha Sharma is putting her full plan on paper — and it leaked.
On July 30, 2026, The Verge obtained an internal memo Sharma sent to Xbox staff, laying out exactly how she intends to dig the company out of its current hole. The memo introduces what she calls the “Four C’s” — four core pillars that will define every major decision Xbox makes between now and fiscal year 2030.
How Xbox Got Here: A Quick Recap
To understand why this memo matters, you need to know the state Xbox is walking into FY2027 with. Phil Spencer, who had been with Microsoft since the company’s earliest days and ran Xbox for over a decade, departed in February 2026 alongside Sarah Bond. Asha Sharma — a former Instacart COO and Microsoft CoreAI executive with no prior background in the games industry — stepped into the CEO role and wasted little time making massive changes.
She brought in a new leadership team, many drawn from Microsoft’s AI departments. Then, at the start of July, she announced what she called the “most significant restructure in Xbox history” — over 3,000 job cuts, with studios like Compulsion Games, Double Fine Productions, Ninja Theory, Undead Labs, and Arkane leaving Xbox’s direct control entirely.
The financial picture behind those decisions tells the story clearly. Xbox closed FY2026 with revenue down 7% — a $1.7 billion decline compared to the previous year. In the final quarter alone, content and services revenue (which includes Game Pass) dropped 10%, while hardware revenue fell 13%. For context, Xbox was operating at profit margins running three to ten times lower than comparable platform businesses. Sharma put it plainly in an earlier memo: “Our business today is not healthy.”
The uncomfortable part? Over 200 million new players came to Xbox in FY2026. The audience grew. The revenue didn’t. That gap is exactly what the Four C’s are designed to close.
The Four C’s, Broken Down
Core — Strengthen the Platform, Led by Console
The first pillar is about getting back to basics. Sharma wants Xbox to stop trying to be everything at once and refocus on its console as the foundation. Console already accounts for roughly 80% of Xbox’s business, but the division had been spreading investment across PC, cloud, mobile, and streaming simultaneously — diluting its core without delivering growth in any single area.
Under the Core pillar, Game Pass, Windows, and cloud streaming remain important — but their role shifts. Sharma is repositioning them as platforms for bringing in new players rather than the primary growth engine. The console leads. Everything else supports it.
This also ties into a structural shift away from Xbox’s traditional decentralized studio model. Sharma confirmed in the memo that Xbox will move toward a system “more focused around our strongest franchises and biggest new ideas” — fewer studios, greater accountability, more concentrated investment in things that actually move the needle.
Content — Grow Great Games Into Global Franchises
The second pillar is where the franchise strategy gets real. Sharma acknowledged in the memo that three Xbox franchises already generate more than $1 billion annually, though she didn’t name them. Given what’s in the portfolio, Minecraft, Call of Duty, and either Elder Scrolls or Fallout are the obvious candidates.
The play here isn’t just to keep making games — it’s to turn Xbox’s biggest properties into full media empires. The memo specifically references building long-term franchise plans “across film, television, consumer products, sponsorship, live experiences,” as well as forming new global partnerships, with China specifically called out. This is the IP-expansion playbook that has worked so well for Nintendo and for entertainment companies like Disney, and Sharma is clearly eyeing that model.
The shift away from smaller, more niche studios is directly tied to this. Xbox under Spencer made a wide range of bets on a broad portfolio of games. Under Sharma, if a franchise can’t realistically scale into something that matters at a global level, it’s not getting the same resources it would have before.
Creation — Make Minecraft the World’s Creator Platform
This one is arguably the most ambitious single bullet point in the entire memo. Sharma wants Minecraft — already the best-selling video game of all time — to become the world’s dominant content creation platform. Think YouTube or TikTok, but built inside a block game.
Sharma wrote that Xbox will “invest in Minecraft more than ever before, strengthening the experiences players love while expanding the tools that help people create, share, build audiences, and earn.” That last word — earn — is significant. This reads like a creator economy play, positioning Minecraft as the platform through which content creators can actually monetize their work inside the game’s ecosystem.
Both Mojang (Minecraft) and King (Candy Crush) now report directly to Sharma, which signals how seriously she is treating them as platform businesses rather than just game studios. Mojang in particular seems positioned as the centerpiece of Xbox’s long-term identity in a way it never quite was under the previous leadership structure.
Connection — Extend the Worlds That Fans Love
The fourth pillar is about expanding Xbox’s biggest franchises beyond the screen. This is the transmedia piece — pushing beloved Xbox universes into film, TV, live events, merchandise, and global partnerships. It’s an acknowledgment that the most valuable gaming IPs today aren’t just games; they’re cultural properties.
Sharma also signaled that casual games will be a bigger part of the picture here, with King’s Candy Crush portfolio playing a meaningful role in bringing Xbox to players who would never pick up a controller. The goal is to meet players wherever they are, not just on console or PC.
The Three-Stage Timeline
Sharma isn’t promising overnight results, and the memo makes that clear with a structured three-stage roadmap for measuring success:
- Stage 1 — FY2027 (ends June 2027): Return Xbox to player and revenue growth. Improve profit margins back in line with industry averages. Every studio and function owns a piece of this outcome.
- Stage 2 — FY2028 and FY2029: The Four C’s investments must translate into “meaningful player value and revenue acceleration.” This is where the bets made in FY2027 need to start paying off at scale.
- Stage 3 — FY2030: Scale what works. By the end of FY2030, Xbox aims to be “halfway to its long-term daily-player goal with sustained double-digit growth in players and engagement.”
That daily-player goal, while not stated outright in this specific memo, has been discussed by Sharma previously: Xbox wants to reach one billion daily active users. By FY2030, the target is to be at 500 million. For reference, the memo states Xbox currently connects with 100 million users daily, more than 500 million monthly, and nearly one billion every year across all platforms.
The Memo Came Right After a Brutal Earnings Report
The timing of this memo is worth noting. It dropped just one day after Microsoft’s latest earnings call revealed the full scope of Xbox’s FY2026 decline — the $1.7 billion revenue drop, the 10% content and services decline, the 13% hardware slide in the final quarter. Sharma had already posted on X before the memo leaked, writing that “over 200 million new players came to Xbox… but our business did not grow with our audience,” and ending with the line: “we expect to return to growth by the end of FY27.”
The internal memo essentially fills in the blueprint behind that public statement. It’s the actual plan, not just a headline commitment.
Whether or not it works is a genuinely open question. Sharma is operating under real constraints — a DRAM shortage driven by AI infrastructure demand has pushed hardware component costs to multiples of their 2025 levels, making it harder to manufacture enough consoles to meet holiday demand. The studios that were cut or spun off represented years of creative investment. And the broader gaming market is not exactly a rising tide right now.
But the Four C’s memo does at least represent something Xbox has been missing for a while: a legible, public-facing strategy with clear timelines and measurable outcomes. Whether Sharma can execute it is another matter — but now players, employees, and investors all know exactly what she’s betting on.
For more context on what Xbox’s struggles mean for the gaming landscape as a whole, it’s worth reading about how Sony is handling its own major shift with the PlayStation disc decision — because both platform holders are navigating the same industry headwinds right now, just with very different playbooks.
And while Xbox is cutting back on smaller studios, other developers are still making interesting moves — like inXile Entertainment’s rumored work on a Fallout-adjacent project, which sits squarely within the kind of major franchise territory Sharma’s memo is pushing Xbox toward.
FAQ
What are Asha Sharma’s Four C’s for Xbox?
The Four C’s are Core (strengthen the console-led platform), Content (grow games into global franchises), Creation (make Minecraft the world’s creator platform), and Connection (extend beloved franchises into film, TV, and live experiences).
When does Asha Sharma expect Xbox to return to growth?
Sharma has committed to returning Xbox to player and revenue growth by the end of fiscal year 2027, which concludes in June 2027.
How much revenue did Xbox lose in FY2026?
Xbox revenue dropped by $1.7 billion, a 7% decline year-over-year across FY2026, driven by declines in both content and services and hardware sales.
What is Xbox’s long-term daily player goal?
Sharma has stated that Xbox’s ultimate goal is to reach one billion daily active users. By the end of FY2030, the target is to be halfway there with more than 500 million daily users.
Why did Sharma restructure Xbox’s studio system?
Sharma said Xbox “spread itself too thin” by maintaining a broad, decentralized portfolio of studios across too many genres and platforms. The restructure moves Xbox toward a centralized model focused on its biggest franchises and highest-impact new ideas.
Which Xbox franchises generate over $1 billion annually?
Sharma confirmed in the memo that three Xbox franchises already generate more than $1 billion per year, though she did not name them publicly.
