Asha Sharma believes Xbox can return to its winning ways by refocusing on its core gaming principles. That has been a top priority for Sharma since taking over as chief executive of Xbox in February, an appointment that surprised some industry insiders because of her non-gaming background and previous role leading AI initiatives for the 51-year-old tech giant.
Since stepping into the job, Sharma has preached a “return of Xbox,” a theme she emphasized Tuesday at the Fortune Brainstorm Tech conference in Aspen, Colorado. Her strategy includes preserving flagship franchises like Halo and ensuring the platform remains accessible. That philosophy, she said, drove her recent decision to lower Game Pass prices, marking one of her most notable moves to date.
“One of our operating principles is that we earn every single player,” she said. “So, we’ve shipped more in the last few months on our platform than we have in the last year. We’ve been able to see a return to growth on Game Pass.”
Sharma succeeded Phil Spencer, Microsoft’s longtime executive vice president of gaming, who retired from the company after 38 years. Spencer built the division up as a videogames powerhouse but then saw it cede ground in recent years. The results have been disappointing. Quarterly gaming revenue has slid, and Xbox’s hardware revenue has endured 30%-plus declines.
The gaming division has been squeezed by competitors such as PlayStation and Nintendo, whose Switch consoles are some of the most popular on the market (PlayStation 5 also dominates). Analysts have said Microsoft’s Xbox consoles and Game Pass subscription service have underperformed, caught between traditional gaming giants and cheaper, casual rivals like the Nex Playground active game system.
Sharma has engineered a series of changes since starting that have won over some gamers. Aside from the Game Pass move, she nixed the AI Gaming Copilot feature for consoles, scrapped old marketing campaigns, and revived exclusive game titles such as Gears of War: E-Day.
More from Fortune’s 25th Brainstorm Tech:
Anthropic’s Boris Cherny, creator of Claude Code, says there are days he manages tens of thousands of AI agents at once
Some gamers were initially wary of Sharma’s appointment due to her AI background. After joining, she told employees in a memo that went viral that Xbox would “not chase short-term efficiency or flood our ecosystem with soulless AI slop.”
On Tuesday, she pointed out that gaming was the original proving ground for compute and AI, since AI infrastructure such as graphic processing units were originally designed for gaming. While she believes AI can invent entirely new genres, she cautioned that it shouldn’t be “painted all over the experience.” And though developers can run local AI inference on Xbox GPUs today, it hasn’t been a priority for the Xbox community, she said.
“This is definitely not an Allbirds moment where we’re going to turn into xbox.ai,” she said, referring to the footwear brand’s bizarre move earlier this year to re-cast itself as an AI company.
Xbox and other gaming companies are grappling with a shortage of memory and storage as AI demand surges. Escalating hardware costs are also pinching the company. Sharma noted that the costs of certain console components will continue to increase. In response, she said Xbox is crafting more flexible consumer plans and exploring distribution partnerships to reach new audiences.
Turning Xbox around will take time, Sharma said. She is exploring different business models and believes exclusive services and content will be key to maintain business health.
“I’m trying to be decisive about the things that we need to invest in, the things we need to prioritize, and the things that don’t represent our brand,” she said. “We will execute in days, but expect that it will take a while to show up on the scoreboard.”
