Asha Sharma’s appointment as CEO of Xbox was attention-grabbing from the moment she was named to the position in February. She was promoted after two years as an AI executive at Microsoft, and took over Microsoft Gaming (renamed Xbox) over Sarah Bond, who had been leading the Xbox brand but whose strategy was in question.
Yesterday, Sharma made clear how much of a reset she intends at Xbox. The company is laying off 3,200 people—1,600 now and another 1,600 over the next year—and divesting from four studios. Microsoft did cuts to about 2% of its total workforce; Xbox’s cuts were 20% of its own.
My colleague Sebastian Herrera has an exclusive interview with Sharma about her new strategy.
“We simply spread ourselves too thin,” she told Sebastian of the problems at Xbox. Microsoft reported a 7% decrease in quarterly gaming revenue in its latest financial report, driven by a 33% drop in Xbox hardware revenue and a 5% decline in Xbox content and services. Despite investing over $20 billion in content and hardware over the past five years (excluding Activision Blizzard), annual revenue has declined by nearly half a billion dollars. On Monday, Sharma told employees in a memo that Xbox’s operating margins are three to 10 times lower than comparable businesses. It’s one of Microsoft’s worst-performing divisions.
Bond had pursued an “Xbox everywhere” strategy that pushed the Xbox brand beyond its core console to places like mobile. But the console represents 80% of the Xbox business; Sharma is now redirecting resources to that core. She’s getting directly involved in key assets, too; the studios behind Candy Crush and Minecraft will report directly to her.
Helping Sharma execute this new strategy will be another new exec to watch—Helen Chiang, who will be Xbox’s first COO. She had been corporate VP for the Minecraft franchise.
Sharma spoke at Fortune’s Brainstorm Tech conference in June, where she provided a sense of some of the challenges gaming is facing. Hardware component costs are rising—and there is only so much the consumer will pay for a console. She said she anticipates “radically different business models,” where it’s not assumed the most premium, high-performance console is the best option for a customer.
The gaming division is responsible for only 6% of Microsoft’s revenue—but it’s one of the tech giant’s most enduring consumer brands. It’s worth calling out that three women of color—Sharma, Bond, and Chiang—have now been leaders in shepherding that brand.
Sharma came from the AI side of Microsoft, where the company’s attention has been focused in recent years. She’s well aware of where tech is headed and how quickly things can change. “History is full of companies that mistake longevity for inevitability,” she wrote in a message to employees. “We will not be one of them.”
Emma Hinchliffe
emma.hinchliffe@fortune.com
The Most Powerful Women Daily newsletter is Fortune’s daily briefing for and about the women leading the business world. Subscribe here.
ALSO IN THE HEADLINES
Meet Kaley Glenn-Mills. She's the K.G.M. of K.G.M. v. Meta et al., the test case that took on social media platforms for being addictive and harmful to minors. She agreed to be the face of the case at age 17; she's now 20. And she's revealing her identity now because she wants to thank the people—and especially, other teens—who showed up with signs saying "We Are K.G.M." "Mostly I was around these lawyers who are all really busy and focused, and I admired them a lot, but I was lonely," she told Bloomberg. "Seeing those signs helped me remember that I was not alone, that I was there as a representative of millions of other teens. It really gave me the strength to carry on." Google and Meta plan to appeal, but for now the jury found the companies acted with malice and ordered them to pay a combined $6 million.
Graham Platner's campaign could come to an end. The Democratic candidate for Senate in Maine, where he was set to take on GOP Sen. Susan Collins, now faces an allegation of sexual assault from an ex-girlfriend, which he denies. Jenny Racicot says Platner entered her home uninvited one night in 2021; he was "deeply intoxicated" and forced himself on her, she says. Racicot says she decided to go public because when another of Platner's exes, Lyndsey Fifield, shared her experience with alleged mistreatment by Platner, the response was muddled by Fifield's ties to the Republican Party. Leading Democrats who had supported Platner, including Sen. Elizabeth Warren, are calling on him to end his campaign.
Will the World Cup translate to more soccer fandom in the U.S.? Carolyn Tisch Blodgett, owner of the New York women's soccer team Gotham is hoping so. She talked to my colleague Diane Brady about her strategy—which includes hiring for expertise rather than passion for the sport. "I think this is like the modern iteration of Moneyball, only for management,” she said. “I feel like I’m in inning zero of using AI inside sports." Gotham is staging an exhibition game at Citi Field on July 15, which is set to break a New York City attendance record for women's sports with 29,000 tickets sold. And the team just announced it's moving to a stadium in Queens for the 2028 season, a move that could improve attendance compared to its current home in New Jersey.
Marine Le Pen can run for president in France. An appeals court just upheld the far-right politician's conviction for embezzlement, but reduced her ban on seeking public office from five years to 15 months. So she is poised to re-enter the race—where she would be a frontrunner, with President Emmanuel Macron term-limited.
ON MY RADAR
The skill that makes women AI-proof is the same skill that's burning them out The Persistent
Inside Trump's ideological fight with the Smithsonian NYT
The WNBA's officiating issue has reached a boiling point The Athletic
PARTING WORDS
"It made me more courageous as a performer and more willing to fail."
— June Diane Raphael, who plays Elle Woods' mom in the new Legally Blonde prequel Elle, on how becoming a mom transformed her career as an actor
