Xbox CEO Reportedly Calls Old Game Pass Strategy a ‘Freefall’ as Console Focus Returns

What happened​

Windows Central says Sharma addressed all of Xbox in an internal town hall. It says the transcript was shared with the outlet and verified by trusted sources. Video Games Chronicle adds that the meeting was held on Tuesday. It says Sharma updated staff on a "reset" that has already included layoffs and the closure, release or restructuring of several studios.

The reported remarks, in brief:

• Xbox was declining in hours spent, players and revenue at the start of the year. It has since stabilized in hours spent.
• She reiterated that the previous Game Pass strategy sent Xbox into "freefall" declines on the balance sheet. Windows Central's reporter likely reads that as damage to both Call of Duty and Game Pass. That is his interpretation, not a disclosed financial analysis.
• She said "we've started to return to growth, more than two to three times what we were," and that she expects it to continue.
• She cited strong starts for Gears of War: E-Day, Minecraft Dungeons 2 and World of Warcraft Forever. She also claimed a 30% increase in positive brand sentiment over the past year.

The "growth" caveat​

The most important detail is easy to miss. Windows Central later clarified that the growth chart referred specifically to first-party growth. That means games Xbox owns and publishes. It is not overall Xbox revenue, Game Pass subscribers or hardware sales.

The "two to three times" figure comes with no baseline, time period or chart values. Collider notes the same thing: Microsoft has not released the underlying numbers or the baseline. VGC also notes that Sharma did not share numbers for Gears of War: E-Day.

Growth "more than two to three times" off an "all time low" can sound dramatic. It may only mean a recovery from a very low base. The reporting doesn't let us say which.

Console first, then everything else​

The strategic message is a priority shift. Sharma reportedly said Xbox doesn't have "the right" to focus beyond console if it can't serve its "most valuable players the right way."

Her supporting points, as reported:

• She called strengthening Gen-9 (Xbox Series X|S) key. She pointed to Xbox Cloud Gaming, the disc-to-digital program and Xbox Play Anywhere growth.
• She hinted that Game Pass will become more "flexible for more players," in line with earlier hints that users could tailor the content they access.
• Windows Central's account says the next generation, called Xbox Helix, would be a "family of devices" rather than one device for everyone. It says some would be made by Xbox and some with partners. No dates, specs, prices or handheld models were given.

These are stated priorities. They are not proof that console sales or investment have recovered, and the coverage doesn't give launch dates, eligibility rules or regional availability for the programs she named. Don't read them as newly shipped features.

Why Windows and PC readers should care​

The reset sits alongside continued PC expansion. GamingBolt reports that Sharma discussed growing Xbox's Windows audience through Xbox PC and Battle.net. Windows Central's account also mentions simplifying publishing APIs across Series X|S, Helix and Xbox PC. So "console first" doesn't mean "PC last." The Xbox app, Play Anywhere and Battle.net still matter to Windows gamers.

The context​

• Game Pass removed Call of Duty and took a big price cut. Xbox also returned to exclusive games and began investing in marketing and features for its Series X|S consoles again.
• One outlet puts the 2026 cuts at nearly 2,000 staff, plus studio closures. That figure comes from a secondary source, so read it as approximate.
• Some outlets go further than the primary reporting. One says Game Pass subscribers fell far short of a target, citing Wall Street Journal data. I could not verify that independently, so treat it with caution.

Balanced take​

The admission is notable because Microsoft spent years presenting Game Pass as the foundation of Xbox's future. A CEO calling the old approach a "freefall" is a sharp break from that message.

There are caveats:

• It is a leaked internal pep talk. Executives tend to emphasize good news with staff after a painful restructuring.
• The metrics are unquantified and limited to first-party games.
• Players have seen Xbox change direction before. Words won't restore trust the way shipped games, stable pricing and clear hardware plans might.

Collider's framing, that Sharma "admitted what gamers have been saying," is editorial. The evidence supports the admission. It does not show that Game Pass alone caused the declines.

What to watch​

1. Whether Microsoft publishes figures for first-party growth, Game Pass subscribers or console sales.
2. Details of the "flexible" Game Pass: tiers, prices and entitlements.
3. Helix hardware specifics, including what Xbox builds itself and what partners build.
4. How the Xbox PC app and Battle.net develop alongside the console push.

For now, the practical takeaway for Xbox and Windows gamers is modest. The company says it is refocusing on its core console audience while keeping PC and cloud in play. The proof will have to come in products and pricing.