What’s next for the XBox console? Microsoft exec lays out plan

Microsoft Gaming’s newly appointed CEO Asha Sharma is steering Xbox back toward its console roots, Digital Trends reported, following significant revenue declines and widespread speculation about the brand’s future.
Sharma, a former executive at Instacart and Meta, has publicly committed to refocusing on hardware and core players. She said she wants to “return to Xbox, and that starts with console, that starts with hardware.”
The shift follows Microsoft’s second quarter 2026 earnings report, which showed a 32% year-over-year drop in Xbox hardware revenue and a 9% decline in overall gaming revenue.
The numbers come amid major leadership changes, including the retirement of Phil Spencer and resignation of Sarah Bond, the report said.
Seamus Blackley, often called the father of the original Xbox, suggested the new leadership could act as a “palliative care doctor” — essentially managing a decline — guiding the brand toward a quieter sunset.
Wedbush Securities analyst Michael Pachter went further, claiming the next Xbox console is already dead and arguing that Microsoft “blew it by embracing Game Pass.”
The previous leadership pursued an “every screen is an Xbox” strategy focused on Game Pass and cloud gaming, which critics say distanced the brand from its core console audience. Microsoft also brought some Xbox exclusives to rival gaming consoles as part of a multi-platform approach, the report said.
Sharma addressed concerns about her artificial intelligence background, promising not to flood the ecosystem with low-quality, AI-generated content — what she called “soulless AI slop.”
Chief Content Officer Matt Booty reaffirmed the company’s “commitment to first-party development,” which includes game studios like Bethesda and Activision Blizzard. Meanwhile, Game Pass remains a central pillar of recurring revenue for the gaming division.
According to Digital Trends, Xbox is not going away but is shifting away from a strategy that failed to resonate with core players. Microsoft is expected to work to rebuild its gaming console reputation in the coming years rather than exit the market.