Xbox Boss Admits Game Pass Missed Targets as Subscriber Gap Hits Tens of Millions

Xbox chief executive Asha Sharma has acknowledged that Microsoft’s Game Pass push didn’t deliver the growth the company was aiming for, with multiple reports suggesting the subscription service is currently short by “tens of millions” when compared to earlier expectations.

Game Pass missed targets, and the gap is widening

Recent reporting has claimed Microsoft expected Game Pass to reach roughly 77 million subscribers during this year, yet the service sits at about 30 million at present. The mismatch is even more stark when compared with earlier long-range goals—during the FTC vs. Microsoft trial in 2023, Microsoft outlined a plan to hit 100 million subscribers by 2030, a target that now looks unlikely.

Xbox job cuts and studio exits tied to a broader reset

Microsoft also announced this week that 3,200 Xbox employees are set to be laid off during the current financial year. The reduction is split across the timeline: 1,600 roles are expected to go immediately, with the remaining positions following later. For many staff members, that means a prolonged period of uncertainty that could stretch out for months.

Those restructuring plans come with creative consequences too. As part of the cuts, Microsoft has closed or removed four internal studios that were brought in during the Phil Spencer era specifically to strengthen Game Pass with new releases. A fifth studio is also said to be in talks to either be sold or shut down.

Sharma’s admission: strategy didn’t scale, and Xbox needs a reset

In an email sent to employees, Sharma framed the layoffs as part of a response to a gaming strategy that “failed,” and she singled out Game Pass as a major factor in that outcome.

“Our business today is not healthy,” Sharma wrote. “We are operating at margins that are 3–10 times lower than comparable platform and publishing operations. We started this console generation with a smaller install base and a higher cost base. To drive growth, we leaned into Game Pass, multi-platform distribution, and a wider range of content. Those efforts created real value, but they didn’t expand at the pace we expected. When that happened, our core business weakened. We then added more teams, increased investment, and bought more time in the hope of a better result. At the same time, the industry is dealing with the most severe hardware downturn in its history. We need to reset Xbox.”

Sharma’s message also reflects how central Game Pass is meant to be to Xbox’s value proposition. The service is built around delivering large perceived value through a growing catalog of games, with major “day one” releases from Xbox-owned studios acting as a key driver. Microsoft has poured significant money into content acquisition for the subscription program, including a reported $69 billion purchase of Activision Blizzard.

Spencer’s thinking was that launching new Call of Duty entries on day one would help push subscriber growth. Instead, the figures haven’t climbed fast enough—especially on console, where hardware sales appear to have hit a ceiling.

Pricing changes, subscriber numbers, and what could happen next

Franchise ownership and the Game Pass puzzle

Microsoft’s Game Pass approach has left many players and observers questioning what comes next, particularly as Xbox leadership reshapes strategy. Under Spencer, Game Pass pricing was increased by 50% in October, a move that current Xbox chief strategy officer Matthew Ball later described as having caused Game Pass to “shed millions of subscribers” over a span of only a few months.

While the precise subscription count in early 2026 hasn’t been confirmed publicly, Microsoft had at least 34 million Game Pass members as of February 2024. By July 2025, Xbox Game Pass revenue was reportedly nearing $5 billion for the first time.

After stepping in for Spencer, Sharma reportedly made a major early change: she reduced the Game Pass price and removed Call of Duty from day one availability. Sharma later told Bloomberg that Xbox “has been able to reset Game Pass after an eight-month decline.” She added that the subscription service “is now back on a path of growth and improving retention,” and emphasized a renewed focus on being “closer to our players and our community.”

What Game Pass could look like after studio exits

With multiple studios no longer tied to Microsoft ownership, the future of day one Game Pass support is less certain. Double Fine, Compulsion, Ninja Theory, and Undead Labs are all exiting Microsoft’s umbrella and are not under any obligation to publish their upcoming games on Game Pass.

That raises the possibility that some upcoming Xbox-linked projects may not arrive on the subscription service when expected—specifically including State of Decay 3 and Senua, alongside whatever Double Fine and Compulsion are working on next.

• Double Fine is exiting Microsoft ownership.
• Compulsion is exiting Microsoft ownership.
• Ninja Theory is exiting Microsoft ownership.
• Undead Labs is exiting Microsoft ownership.

Open questions: can Microsoft grow Game Pass with fewer day one bets?

The practical issue now is how Microsoft can expand Game Pass further using what it still controls. If even new Call of Duty releases can’t pull subscriber growth upward at an acceptable rate, the company may need to rethink how aggressively it places first-party titles inside the subscription.

That leads to several possibilities—some already hinted at by the broader direction of travel. Microsoft could remove additional games from Game Pass day one in favor of more direct sales revenue. There’s also ongoing speculation around whether major Bethesda releases, such as The Elder Scrolls 6, could launch day one on Game Pass, as well as whether the next mainline Halo installment will follow the same approach.

Another comparison being discussed is whether Game Pass starts moving closer to Sony’s PlayStation Plus model, where first-party titles aren’t consistently launched on the subscription service on day one.

• Could Microsoft pull more games out of Game Pass as day one titles to chase direct revenue?
• Will Bethesda’s The Elder Scrolls 6 launch day one on Game Pass?
• Will the next mainline Halo game launch day one on Game Pass?
• Could Game Pass shift toward a structure more similar to PlayStation Plus, where first-party games don’t routinely arrive day one?

So the big question many Xbox fans are asking is simple: is it finally time to concede that Game Pass, at least in its current form and pricing structure, hasn’t delivered the results Microsoft needed?