Xbox's recent strategic moves have failed to reverse the platform's declining fortunes, according to sales and engagement data reviewed by Circana analyst Mat Piscatella. Despite CEO Asha Sharma's efforts to stabilize the business since taking the role in February, Piscatella said he has not observed any positive impact on Xbox's performance in the US gaming market. The initiatives that were expected to drive growth have instead produced minimal or no measurable results.
One of Sharma's key programs, a disc-to-digital conversion initiative, has not altered Xbox's downward trajectory in physical software sales. Piscatella noted that the program "hasn't changed their sales of new physical software trend at all." Similarly, the decision to make Gears of War: E-Day an Xbox console exclusive was intended to boost hardware sales but has not delivered that outcome. Despite being a well-crafted entry in the franchise, the exclusivity arrangement ultimately weakened the game's potential to drive broader platform adoption. Piscatella described the move as one that "chops the legs out" from under the title's ability to help Xbox.
Game Pass and Call of Duty
Sharma's choice to remove new Call of Duty titles from Game Pass has also backfired, according to the analyst. The franchise experienced a significant loss in engagement following the removal of Modern Warfare 4 from the subscription service. Piscatella emphasized that this decision yielded no offsetting benefit for Xbox, making it another strategic misstep. He concluded that finding positive signals for the platform has become increasingly difficult.
Piscatella suggested that Sharma's recent actions are designed primarily to appeal to hardcore Xbox fans on social media rather than to drive tangible business results. While these moves may generate favorable sentiment online, they have not translated into improved sales figures or player engagement metrics. The analyst stated bluntly that "in terms of actual results, I'm not seeing anything right now."
Long-Term Restructuring Plans
Sharma has acknowledged that her turnaround strategy will not produce immediate results. In a memo to staff, she outlined a long-term vision requiring studios to return to growth in both players and revenue by the end of fiscal year 2027. Beyond gaming, Sharma established a new unit called XP designed to expand Xbox's presence across film, television, consumer products, sponsorships, live experiences, and new markets including China.
Sharma's broader ambition extends to profitability margins. She has set a goal for Xbox to align with competitors Sony and Nintendo by 2027, then surpass them by mid-2030. Currently, Xbox operates at approximately a 3% profit margin, meaning the company retains roughly 3 cents for every dollar in revenue after expenses. This lags significantly behind PlayStation's 9.9% margin and Nintendo's 16% margin. Achieving parity with these competitors would require substantial operational improvements and revenue growth.
Despite Sharma's comprehensive restructuring plan and stated commitment to a multi-year recovery, the immediate outlook remains challenging. The platform continues to lose ground in hardware sales, and recent high-profile decisions have failed to reverse that trend. Whether the longer-term initiatives will succeed in restoring Xbox to competitive profitability remains uncertain.