The heads of Xbox have discussed how expensive console components are ahead of plans for Project Helix, which seems to be aiming for a Christmas 2027 launch.
Thanks to ongoing memory shortages forcing every video game console to raise prices, it’s hard to be enthusiastic about the next generation when it’s perfectly likely that the PlayStation 6 and Project Helix could cost at least £1,000.
Xbox boss Asha Sharma is keenly aware of this, acknowledging recently that Microsoft needs to pursue ‘new business models’ for Project Helix ahead of its expected, but not officially confirmed, 2027 launch.
Sharma, as well as Xbox Game Studios head Matt Booty, have discussed this further in a new memo to employees – one that’s been made public – that champions the future of the Xbox business… right as Microsoft reportedly plans to lay off even more people.
The memo, which you can read on Xbox Wire, starts by celebrating how successful the past 100 days of Xbox have been, as Sharma and Booty brag about Xbox having ‘over one billion players’ and how ‘our franchises are also among the largest and most beloved globally and are now breaking records in TV and film’ (a reference to Minecraft and Fallout).
This is immediately followed by an admission that Microsoft has been spending too much money and gained little in return: ‘Excluding Activision Blizzard King, over the past five years, we have spent over $20 billion on ongoing investments in our content, platform, and hardware subsidy, but our annual revenue has declined nearly half a billion during that time.’
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Sharma and Booty also directly touch upon the memory shortage, explaining that the costs for console storage components have doubled twice since last autumn and are expected to increase again ‘as we plan for the 2027 holiday season.’
This suggests Microsoft intends to launch Project Helix, or at least some kind of new hardware, by Christmas next year. Unless Microsoft is somehow convinced there’ll be a huge surge in demand for the Xbox Series X at that point.
Sharma and Booty believe there’s already a growing demand right now, saying ‘We are currently unable to make as many consoles as players want to buy, and we need a new business model and partnerships for hardware as we remain committed to Helix.’
They also add, ‘We believe we have been impacted more greatly than many of our peers due to the choices we made over the last half decade,’ but it’s unclear what choices they’re referring to.
There’s no mention of any planned layoffs, although the memo does end with, ‘Let’s reset for a stronger Xbox and build the #1 gaming and entertainment company.’
It’s difficult not to conflate ‘reset’ with layoffs and according to a Bloomberg report (which also claims Microsoft pulled a new Halo trailer from Sony’s last State of Play and cancelled Gears Of War: E-Day for PlayStation 5), that’s precisely what Microsoft has planned to offset declining revenue.
The exact scale of the layoffs is unknown, but they’re rumoured to affect around 1,000 people and are expected to come into effect after June 30, which marks the end of Microsoft’s fiscal year. They could also include the closure of one of Xbox’s studios, according to The Verge.
As a reminder, Microsoft has laid off more than 6,000 employees from its Xbox division in just the last couple of years. Last year’s layoffs also came right after the end of June, when then Xbox boss Phil Spencer boasted how well the company was doing, as he told people they were losing their jobs.
This resulted in multiple game cancellations, including one game Spencer personally loved during playtesting and the Perfect Dark reboot, which was meant to be the debut title of the now shuttered The Initative.
Despite all this being the clear result of poor management, no executives were let go and Spencer continued to remain in charge of Xbox until he retired from Microsoft in February.
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