Previous Game Pass Strategy Sent Xbox Into 'Freefall,' CEO Asha Sharma Reportedly Tells Staff

It's no secret that Xbox has had a rough time in 2026. With nearly 2,000 staff cut as part of sweeping layoffs and studio closures, Microsoft's gaming business is in the middle of one of the most significant restructures in video game history. But what led Xbox to this point? According to CEO Asha Sharma, Game Pass played a key role.

Today, in an internal memo obtained by Windows Central, Sharma reiterated that Microsoft's Game Pass strategy sent Xbox's balance sheet into "freefall." Jez Corden, who initially reported on this memo, suggested that this was because of "the damage at both ends to Call of Duty and Xbox Game Pass."

It's easy to see why that may be the case. After Xbox bought Activision Blizzard for an eye-watering $69 billion and added Call of Duty to Game Pass, subscription costs skyrocketed, which likely scared away a lot of existing subscribers, and at the same time cut Call of Duty's sales. …