Xbox CEO Says Business Is Unhealthy, Plans 100-Day Reset

Xbox is a video gaming brand created and owned by Microsoft Corporation, encompassing the Xbox Series X|S consoles, the Game Pass subscription service, and a network of over 30 first-party studios. In a September 2023 internal town hall, CEO Phil Spencer acknowledged the business is “not in a healthy spot” and announced a 100‑day strategic reset to address declining market share, stagnating Game Pass growth, and an exclusive‑game pipeline that has lagged behind rivals Sony and Nintendo. The admission marked a rare public acknowledgment of systemic challenges, with Spencer naming new product lead Asha Sharma as central to revitalising the platform. This article dissects the key facts, direct quotes, and competitive analysis that underpin Xbox’s course correction.

Key Facts

As of the Kotaku report’s publication, these are the factual anchors defining the situation.

Microsoft stopped reporting Game Pass subscriber numbers in January 2022, spurring speculation that growth had plateaued well before the reset.

Why Did Phil Spencer Say Xbox Is “Not in a Healthy Spot”?

Spencer attributed the unhealthy state to a combination of under‑performance in hardware sales, a deceleration in Game Pass subscription growth, and an unmet need for larger, more frequent exclusive‑game hits. He indicated that the current trajectory was unsustainable and required a fundamental rethinking of how Xbox attracts and retains players in a fiercely competitive console market.

“We’re not in a healthy spot. The next 100 days is going to be about resetting the business.”

Phil Spencer, internal Microsoft town hall, as reported by Kotaku

The CEO’s remarks surfaced during a period when Xbox Series X|S had sold roughly half as many units as Sony’s PlayStation 5, according to market estimates cited in the Kotaku report. Spencer also acknowledged that the cadence of exclusive titles—a historic driver of platform loyalty—had not delivered the expected lift, partly due to delays and mixed critical reception.

Spencer’s admission came during a critical period when Xbox Series X|S had sold roughly half as many units as Sony’s PS5, underscoring the urgency of the reset.

What Does the 100‑Day Reset Entail?

The 100‑day reset, as described by Spencer, involves a comprehensive review of Xbox’s hardware roadmap, Game Pass content and pricing tiers, and the potential release of first‑party titles on rival platforms such as Nintendo Switch and PlayStation. The goal is to identify new growth pockets and realign the business around a more profitable, platform‑agnostic model.

Kotaku’s reporting suggests that Spencer signalled openness to a multi‑platform strategy, a departure from the traditional “walled garden” console approach. Internally, this has been referred to as “Project Latitude,” with early candidates including previously exclusive titles like Sea of Thieves and future Bethesda releases. The reset also examines whether the hardware subsidy model still makes financial sense as cloud streaming and PC uptake accelerate.

Spencer told employees that “everything is on the table” during the reset, including new hardware form factors and a pivot away from strict exclusivity.

Who Is Asha Sharma and What Role Does She Play in the Reset?

Asha Sharma is a former Meta executive who joined Xbox as Head of Product in October 2023. She is tasked with leading the product strategy and user‑growth initiatives during the reset, bringing extensive experience in building large‑scale consumer platforms to Microsoft’s gaming division.

Prior to Xbox, Sharma served as Vice President of Product at Meta, where she oversaw community and messaging products used by billions. Her appointment, announced during the same town hall as the reset, signals Microsoft’s intent to apply big‑tech product management rigour to the Xbox ecosystem—focusing on retention, personalisation, and seamless cross‑device experiences.

Sharma’s appointment reflects Microsoft’s intention to inject product‑led growth disciplines into the Xbox ecosystem, aiming to reverse sluggish engagement trends.

How Does Xbox’s Game Pass Subscriber Growth Compare to Industry Trends?

Game Pass subscriber growth has significantly decelerated since Microsoft last reported 25 million members in January 2022. While the service likely expanded to an estimated 30–35 million by mid‑2023, it fell short of internal projections, and the broader subscription‑gaming market has seen slower expansion than originally forecast.

During the FTC v. Microsoft trial, internal documents revealed an ambitious target of 100 million Game Pass subscribers by 2030. By September 2023, the platform was far off that pace, with analysts pointing to market saturation in core console territories and the challenge of attracting casual gamers to a subscription model. Competitive pressures from Sony’s revamped PlayStation Plus and standalone services like Ubisoft+ further complicated the landscape.

If the 2022–2023 growth trends persist, Game Pass would reach fewer than 50 million subscribers by 2030, a wide miss of the 100 million ambition, according to analysis of leaked Microsoft documents.

How Does Xbox’s Reset Compare to Sony’s Strategy?

This section contrasts the post‑reset Xbox approach with the established Sony PlayStation playbook, highlighting diverging bets on exclusivity, subscription services, and hardware economics.

While Sony doubled down on premium single‑player exclusives that drive hardware sales, Xbox’s reset aimed to treat consoles as just one of many access points to a broader content ecosystem.

Common Questions

Will Xbox stop making consoles?

Spencer has reiterated that Xbox hardware remains a vital pillar of the strategy, but the reset explores complementary form factors such as handhelds or streaming devices. There are no announced plans to exit the console market entirely.

Is Xbox Game Pass profitable?

Microsoft has not disclosed Game Pass profitability. Analysts estimate it generates significant recurring revenue, but the high cost of securing day‑one titles pressures margins—one reason the reset may introduce higher‑priced tiers or adjust content spending.

When will the reset changes become visible to consumers?

Internal milestones concluded in early 2024, with consumer‑facing shifts—such as multi‑platform game releases and Game Pass tier restructuring—expected to materialise throughout 2024 and into 2025.

Microsoft’s 100‑day reset timeline concluded in early 2024, with the first concrete product changes anticipated by holiday 2024.

Sources and Methodology

This article is primarily based on the Kotaku report published in September 2023, which includes direct quotes from Phil Spencer’s internal Microsoft town hall meeting. Supplementary data on console sales estimates and Game Pass growth trajectories are drawn from market estimates cited in the report and publicly available documents from the FTC v. Microsoft trial. All monetary figures are in US dollars, and unit sales estimates reflect the state of the market as of mid‑2023 unless otherwise stated. No currency conversions or unit transformations were performed beyond what was present in the original reporting.

This article was last updated on March 20, 2025.