It’s just Xbox: Microsoft’s gaming leaders usher in a new era with an old name, a new metric, and a rival mindset
Microsoft is changing the way it measures success in its Xbox business, focusing on daily active players instead of long-term – a strong metric that shows how the major social media platforms have improved to measure user engagement and retention.
Xbox will also review its approach to game selection, release timing across platforms, and use of AI, while looking at strategic acquisition opportunities.
And yes, it’s the Xbox business again, not “Microsoft Gaming,” the broad name the company adopted for the division internally during its massive acquisition of Activision Blizzard.
That’s one of the highlights of a memo Xbox CEO Asha Sharma and Chief Content Officer Matt Booty sent to employees Thursday, laying out the division’s strategic vision for the two months they’ve been involved.
The memo, titled “We Are Xbox,” opens with an implicit admission that gamers are frustrated, and positions Xbox as a competitor with work to do.
“From the beginning, Xbox was built by people who were willing to try things that others wouldn’t,” they write. “We put the consumer bet inside the business company because we believe that games will define the living room, and we were in danger of missing out.”
The memo comes amid financial pressure on the gaming industry. Revenue fell 9% in the latest holiday quarter to $5.96 billion, with Xbox content and services coming in below internal estimates. Hardware sales fell 32%.
Earlier this week, Sharma made his first big move, dropping the price of Game Pass Ultimate from $29.99 to $22.99 a month while removing new Call of Duty games from the same-day lineup — undoing a bunch that raised prices by 50% last October.
Sony’s PlayStation is still going strong in the current console generation, while Nintendo’s Switch 2 launched strongly.
The memo refers to Microsoft’s next-generation console, Project Helix, which it unveiled at GDC in March, saying the machine will “lead in performance and play your console and PC games.” Alpha hardware is expected to go to developers in 2027.
Sharma took over as CEO of Microsoft Gaming in February, replacing Phil Spencer, who retired after 38 years at the company. He ran Microsoft’s CoreAI product organization and previously served as chief operating officer at Instacart and as vice president at Meta.
That social media background may help explain the shift to daily active players as the “north star,” a metric that describes how Facebook and Instagram measure their success.
Microsoft said its gaming ecosystem has more than 500 million monthly active users across all platforms and devices. It’s unclear whether Microsoft will switch to everyday users in its public reporting.
The memo closes with the division’s 10 operating principles, including “leading every player,” “protecting our creativity,” “always rebel,” and “transparency is kindness.” They concluded, “We’re here to do the most creative and daring work of our lives, and that’s what we’re going to do together.”
Microsoft reports earnings for the March quarter next week, including results for Xbox.
Read the full memo here.
