Xbox CEO Asha Sharma Says Phil Spencer's Studio Acquisition Strategy Spread Microsoft's Resources Too Thin

Xbox CEO Asha Sharma has acknowledged that the company's previous strategy of acquiring numerous game studios ultimately stretched Microsoft's gaming division too far. Speaking about the recent restructuring of Xbox, Sharma said the business had become overly fragmented after years of rapid expansion, leaving resources spread across too many teams and projects. According to her, the company lost focus on its core priorities, making it increasingly difficult to support every studio effectively.

Sharma explained that Microsoft's acquisition strategy significantly increased Xbox's development portfolio but also created organizational complexity and rising operating costs. She argued that managing dozens of studios with different technologies, cultures, and production schedules reduced efficiency and slowed decision-making. As part of Xbox's new direction, the company is simplifying its structure, reducing management layers, and concentrating investment on its biggest franchises and long-term growth areas.

The comments follow Microsoft's recent wave of layoffs and the decision to restructure or divest several studios. Sharma emphasized that these measures are intended to build a healthier and more sustainable Xbox business rather than continue pursuing expansion through acquisitions alone. She added that the previous approach "spread resources too thin," making it harder for the company to maintain financial stability while supporting every internal team.

Although the changes have generated significant debate within the gaming community, Microsoft says it remains committed to investing in Xbox's future. Under Sharma's leadership, the company plans to prioritize flagship franchises, streamline operations, and focus on sustainable long-term growth instead of continuing the aggressive acquisition strategy that defined the Phil Spencer era.