Xbox CEO Says New IP Is Vital as FY27 Restructuring Targets 3,200 Roles

What Sharma reportedly said​

Windows Central published what it described as "wholly unauthorized transcripts shared to Windows Central via multiple trusted sources" from last week's Xbox town hall. This is not an official Xbox transcript. The outlet says it verified the material, and other outlets, including Video Games Chronicle and GameSpot, have repeated the quotes.

In the transcript, Sharma says Xbox is backing its strongest franchises, wants great games to become global billion-dollar franchises, and also wants to keep creating enduring new IP. She then adds, "We will not survive if we only revive on the past," and says Xbox needs new ways, and courage, to invent new IP that reaches new audiences.

A small wording point: the transcript says "revive on the past". GamesRadar's paraphrase uses "lean on the past" or "rely on the past". The meaning is close, but the quoted words are Sharma's.

Windows Central also reports that Sharma discussed growing King and casual games. It adds that she reiterated moving some IP, such as Halo and Sea of Thieves, under Activision. She also hinted that more "simplification" could come, with no specifics given.

The restructuring behind the remarks​

The context comes from Xbox's own July 6 memo, "Resetting Xbox", published on Xbox Wire. In it, Sharma wrote that she had decided to reduce the team by approximately 3,200 throughout FY27, per the memo text. The memo described about 1,600 role eliminations on the day of the memo. It also said four studios would leave Xbox for new management.

The headline figure of 3,200 is a year-long target, not a completed layoff count. GamesRadar's phrasing, "in the middle of laying off," is fair. Readers should not assume all 3,200 roles are already gone.

The studio outcomes in the July memo were not identical:

• Compulsion Games and Double Fine: returning to their own management as independent studios, keeping their IP and catalogs and getting runway for their next games.
• Ninja Theory and Undead Labs: these had entered terms to join new ownership, with funding to complete and grow Senua and State of Decay 3.
• Arkane: management in France was starting required consultation with its Works Council to review strategic options. No sale or closure was announced.

GamesRadar says Undead Labs has gone independent and that two agreements for Ninja Theory have fallen through. That differs from the July memo's wording, which described Undead Labs as entering new-ownership terms. I could not confirm either change from the evidence available, so treat the later status of those two studios as unsettled. The July memo remains the authoritative statement of intent.

Xbox's own diagnosis​

The memo is blunt. Sharma said Xbox's business is "not healthy" in the memo's own words, with margins three to ten times lower than comparable platform and publishing businesses. She said Game Pass, multiplatform publishing and a broader content portfolio created value but did not grow as fast as expected. She also cited an industry-wide hardware crisis.

Other claims in the memo, all Xbox's own and not independently audited:

• In a typical year, Xbox lost 64 cents for every dollar it invested in studios.
• Management layers, up to 14 in some places, would be cut to five or fewer, and three where possible.
• Vendor spend would be reduced by 50%.
• Helen Chiang was promoted to the new chief operating officer role, with profit-and-loss responsibility across content, hardware, platform and services.
• Dave McCarthy is retiring after 17 years.

The tension GamesRadar highlights​

GamesRadar argues the new-IP message sits awkwardly beside recent cancellations. It cites Everwild and ZeniMax Online's Project Blackbird last year, and more recently Ninja Theory's Project Mara.

There is an important qualifier. The July memo said none of Xbox's publicly announced first-party games or projects were being cancelled as part of those specific reductions. That is narrower than saying no project has ever been cancelled. The cancellations GamesRadar names were not confirmed in the July memo, so I would treat them as GamesRadar's attributed context.

Windows Central makes a related point. Some of the studios now spun off or shut down, such as Ninja Theory, Double Fine and Compulsion, were the ones generally working on new franchises. It notes their work was often award-winning even if it was not a commercial success.

What the remarks do and don't tell us​

Supported by the reporting:

• Sharma publicly frames franchise growth and new IP as simultaneous priorities.
• She links long-term survival to inventing new audiences, not just monetising existing ones.

Not supported by the reporting:

• Any specific new game, release date or budget.
• Which studios will make the new IP, or how many there will be.
• Any guarantee that future original projects will be protected from cancellation.

Analysis​

This is general industry reasoning, not something from the transcript. The two goals pull in different directions. Franchise bets such as Fallout, Call of Duty or World of Warcraft are lower risk. Original IP is expensive and often fails. The July memo's claim of losing 64 cents per dollar invested suggests Xbox management is now very sensitive to that risk.

The tech press has noted the wider pressures. GameSpot points to live-service games absorbing player time and money. It also says AI-driven component demand has pushed up hardware prices, which makes buying a console or gaming PC more expensive. That makes breaking through with a new franchise harder, because the audience has fewer reasons to take a chance.

The credibility test will be which new projects get funding and shipping dates, not the phrasing of a town hall. Both GamesRadar and Windows Central point to Hideo Kojima's OD and Physint as examples of Xbox publishing new IP. GamesRadar says Xbox is publishing both, and that Physint came to Xbox after Sony was set to cancel it. Publishing outside projects is not the same as building in-house studio capacity, though.

What to watch next​

• How Xbox's remaining first-party studios are resourced after the FY27 reductions.
• The final outcomes for Arkane, Ninja Theory and Undead Labs.
• Any further "simplification" of the studio structure, which Sharma hinted at.
• Whether the new IP push shows up in announced titles, as opposed to town hall rhetoric.

One caveat: the town hall transcript is unofficial, so details could change in a formal Xbox statement. Until then, the verified record is Xbox's July memo and the reporting around the leaked remarks.