---
title: 'Xbox is in Trouble: Asha Sharma''s "Reset" Memo Explained - Unlocked Clips'
source: 'https://youtube.com/watch?v=Mo8HlLcd_IY'
video_id: 'Mo8HlLcd_IY'
date: 2026-06-18
duration_sec: 0
---

# Xbox is in Trouble: Asha Sharma's "Reset" Memo Explained - Unlocked Clips

> Source: [Xbox is in Trouble: Asha Sharma's "Reset" Memo Explained - Unlocked Clips](https://youtube.com/watch?v=Mo8HlLcd_IY)

## Summary

The video discusses whether Xbox Game Pass, nine years into its operation, is proving to be a mistake or unsustainable in its current form. The panel analyzes how Microsoft's heavy reliance on subscriber numbers, combined with day-one AAA releases, creates financial volatility and conflicts with the goal of reviving exclusives. They also cover recent reports of potential studio closures and a strategic 'reset' at Xbox under Asha Sharma.

### Key Points

- **Game Pass as a long-term experiment** [0:17] — Game Pass is 9 years old and was intended as an experiment to become the 'Netflix of video games' requiring significant investment.
- **Financial reliance on subscribers** [3:00] — Xbox is heavily dependent on subscriber numbers, making it vulnerable to price hikes and cancellations.
- **Consumer perspective vs. business reality** [2:00] — Consumers like Game Pass for its convenience and exposure to new games, but it creates challenges for game sales and platform exclusivity.
- **Xbox Live Arcade as an alternative model** [11:55] — The traditional Xbox Live Arcade model had mandatory free demos and curated selection, offering a different approach to game discovery.
- **Tension between exclusives and Game Pass** [13:40] — The panel questions whether the 'day one' AAA model for Game Pass can coexist with the goal of bringing back exclusive games, given low hardware sales.
- **Potential studio closures** [20:49] — Reports suggest studios like Compulsion Games, Ninja Theory, and Double Fine may be shut down or spun off due to financial pressures.

## Transcript

But I think what it is time to bring up,
I mean, in fairness, the community's
been talking about this for a while, and
some people have really strong feelings
about it one way or the other.
>> We are now 9 years officially into the
Game Pass experiment.
>> And I think it is fair. I'm not I don't
say that in like a derogatory way
experiment like it
>> it had never been done before like a
especially a major first party trying to
create by their own words I don't know
if they ever literally said this but we
all understand Game Pass to be an
attempt
>> to be the the Netflix of video games
>> and it was going to take a lot of money
to to pull off and so you know
Microsoft's got plenty of that in their
war chest. So, we're 9 years into the
Game Pass experiment. And so the
question that I want to ask each of you
is,
is Game Pass in the grand scheme of
things for Xbox, I'm not saying for the
industry, for Xbox as a business, cuz
that's what all this is about this week,
>> is Game Pass proving to be a mistake, or
if we don't want to quite go that severe
necessarily,
is it is it sustainable in its current
form? term whereby day one releases go
into the service like it people are not
buying games on Xbox we know this they
don't even they won't even give out
numbers anymore some third parties are
even not releasing or very skeptically
releasing games and they're not selling
games on Xbox so Miranda you first here
where do you how much of Xbox's current
self-imposed predicament
is a result of the Game Pass experiment
not going as well as they'd hoped.
>> First thing I'm going to say, I still
like Game Pass. I think it's very
>> from a consumer perspective. Yeah,
perspective, don't get me wrong. So,
yeah, go ahead. Yeah, it's like the
consumer perspective is like game pass
rules. Like it is so convenient for
finding so many different games, trying
smaller ones, cliff, as you're saying,
like it's the indies that hold or like
smaller experiences that hold a lot of
this together in the meantime between
development cycles. Uh, and I think Game
Pass really lends itself to exposing
yourself to new kinds of games, new
developers without having to invest
much. That being said, I do
think
Microsoft has put itself in a strange
place with how it expects success. And I
know they do have some metrics on like
how much people play with Game Pass as
far as like how much time have they
spent within the game, like did they
finish this game? Like there are ways to
track that.
And I think that is informing some of
the changes they're looking at now. But
I do think at the end of the day because
they are so married to the subscriber
bottom line as I was saying earlier when
they make a massive mistake like raising
the price too much to the point where
everybody just cancels because it is too
much especially if you have the higher
tier people who are paying more per
month cancelling in mass um you're kind
of risking something fundamentally
challenging like if you put all your
eggs in one basket
what are you doing and so I think that's
maybe also why we started seeing the
move away exclusives, right? So, it's
like, okay, if we can sell these games
on other platforms, that helps
supplement Game Pass in some way if
we're losing subscribers. So, going back
to being exclusive, still having
everything in there, except for Call of
Duty because of course that that is
another big thing that people buy.
That's like one of the things that
people buy every year and instead of
just subscribing for a month, which is
way cheaper than just buying the game,
you know, you get the game plus
everything else. So, I think they've put
themselves in a strange place for
financial success, especially when we
know like the system in in the race
against the other consoles, if you want
to frame it that way, is just not
selling the same way. Like the Xbox is
just not selling like the PlayStation or
now the Switch 2, but I think Switch 2
is like in a different place, but that's
new, right? Um, I think that comparison,
which we know that's not necessarily
what drives her sales, but I think is
part of this puzzle piece as well or as
a piece of this puzzle as well. Um, and
it's that that hard line of well, I want
these studios and Xbox to continue, but
I also selfishly want game pass to
continue as it is because it is so
helpful for being able to play these
games. I I think I've said it before too
like if I had Game Pass as a kid in like
insanity like incredible incredible
exposure to all these games and that is
something that I think Phil really built
on and like really
nailed with his team was that they
wanted games to be something that people
can get into as a hobby when it is
getting more and more prohibitively
expensive. I think, you know, of my
childhood of how many games I had access
to simply because of money, like how
much pocket change I had to save just to
get one game and how long that took and
how picky you had to be. And the
ecosystem of games access is changing so
much as far as like freeto play and
other experience-based games that Game
Pass still likens to that free feeling
in a way. That being said, they still
make money. So like what you know I I
think it is a challenge for them to
solve and I don't know what the solution
is like that that comes into a financial
point where I'm like that is beyond me.
I'm a writer, but um I like I can
critically analyze that obviously this
is a problem and but
because of how volatile like a
subscriber based
organization like if you're running this
massive massive division on subscribers
that is like a really hard place to be
if you falter. So yeah.
>> Yeah. I think the the thing that I go
back to is a couple of different things.
So, like last night I downloaded Beat
Down Survivors. Uh, shout out to my
friend New Challenger out in the world.
Um, and knew of that game was like, "Oh,
I forgot it's on Game Pass. Let me go
play it and and check it out and go and
I had a blast with it." And then I wind
up buying it, right? I use Game Pass as
a try it before you buy it space, right?
>> Alongside the day one layer of it that I
think is really important, right? So I
am a person who am looking at the
service as a person who is thinking
about you know even thinking about the
kind of good stewardship part that you
talked about a little bit earlier in in
the show uh Miranda around like I know
that there are there are games that
wouldn't have actually been out in the
world without Game Pass right
>> they have been subsidized by the upfront
money that you wind up getting and they
wind up bridging the gap between getting
your thing made or not getting your
thing made right some of those people
may not have ever gotten a a a the
amount of sales that would have been
able to recoup whatever that development
cost was for them, right? Then you have
the Call of Duties who, you know, are
going to sell no matter what you do. And
I'm sure that when you think back about
like how much money they potentially
didn't make by putting it in Game Pass,
that might have not been the right
direction for where that game winds up
landing in that space. I always think of
this thing as like one of the things
that is missing in this era of gaming.
At least this last genre, not genre,
this last era of gaming, whatever this
last um
>> generation
>> generation. Thank you. That's the word I
was looking for. Was that we don't have
a lot of portfolio curation anymore. And
I think what game what game pass does is
open up a space where you are able to
see and play a variety of things that
you might not have ever touched before.
And it might again do that thing of
being like, "Oh, I want to support these
folks because they made something dope
and I think this is really interesting."
Does it wind up hurting the entire
industry where we see now some of those
folks who are in that mix be hurt in a
in a way that they didn't necessarily
foresee? Absolutely. But I think we have
now, like you said, have nine years in.
I think there's a space where if you are
now looking at that conversation and you
go to Xbox and say, "Hey, I want my game
on your platform, you have enough people
that you can talk to in the development
uh uh, you know, community to be like,
is this you've been a you've made a game
that's similar to scope that that my
game is in. How did you see that kind of
work out for you?" And you can make a
good decision there to be able to say,
"Well, maybe this isn't for me and maybe
I need to do the traditional route and
go put it on, you know, multiple
platforms, put it on Steam, put it in
all these other places where you think
might give you the most benefit for your
potential growth on this kind of game."
I think there's a lot of space that we
don't know. And again, I I I will also
raise my hand and be like, I don't know
anything about how that thing works in
the back end. You know, I don't know
what it I haven't made a bisdev deal
yet. You know what I mean? I haven't
done that yet.
>> So, I you know, I don't know. But I do
think that like there are always going
to be benefits. I think the thing that
comes back to all of these conversations
is that we're still talking about risk,
right?
>> Yeah.
>> And we're still talking about making a
bet. Phil Spencer made bets, Xbox made
bets with Don Matrick made bets. Like
everyone is making bets. The thing that
we don't know is how many of those
things are going to pay off, how many
things are going to tank and then how
many of those things are going to have
to be readjusted for again a a moving
target that is consistently changing
that consistently changes based on the
market. No one knew that we were going
to be in a silicon and AI crisis now
with with hardware. No one knew that we
were going to have the COVID part of it
that I talked about earlier. No one knew
that Roblox and and Fortnite were going
to become the biggest things on the
planet and suck up so much of your time
alongside social media and Tik Tok and
all those other layers of stuff. No one
knew that stuff. You know what I mean?
So, we're all trying to get in where we
fit in while also trying to figure out
where things are going to be and
forecasting as far as you can. But it's
all a moving target and those things are
going to the thing that is the most
important is how do these companies
adjust quickly,
>> right? Can you make like they they made
that change really fast when they saw,
oh, we we're hemorrhaging a lot of
subscribers here. We need to readjust
that and figure out what that looks
like. Now, in in in Asha's uh kind of
new space, she's going to have to
consistently think about how fast and
nimble they can move to adjust to all of
these market changes that are happening
that are self-imposed, historical from
the brand and going to be coming in from
all the things that we're now seeing
alongside tariffs, alongside weird
things that are happening across the the
geopolitical spectrum. All those things
are going to be tied to the way that
business works in the video game space
moving forward. And you can't deny that.
So that's going to be the space where we
wind up seeing the most change. And I
think now that they're being more
transparent with some of these things
and ripping the band-aid off, it doesn't
help the developers who are going to be
hurt, but it also gives people the space
to understand what is actually kind of
happening when these discussions wind up
popping up.
>> You I'm glad you mentioned curation
because uh first and first of all, there
are definitely there are absolutely
there are plenty of game pass success
stories. M I've talked to plenty of
developers that plenty of them have put
out press releases where like they've
been huge on Game Pass, bigger than they
would have been, you know, without
without that sort of spotlight on them.
So, I don't want to I don't want to sit
here and make it seem like I'm saying
that Game Pass is this like complete
total failure.
>> Game Pass is the devil. No, I'm just
playing
>> in any in any sense. But when you I'm so
glad you brought up curation because
th I will if you're playing the unlock
drinking game at home, buckle up. Uh
this is again like they had a thing that
they could still bring back
>> called Xbox Live Arcade.
>> Oh man.
>> To your to your point K when you said
that you use Game Pass to try stuff out.
>> Yeah. live arcade games. Part of the
mandate of the program was that every
live arcade game had a free playable
demo right right at launch. Like it was
part of your certification and
submission process
>> as part of getting your game out on the
Xbox Live Arcade platform.
There is the indie select thing now that
I get press releases from the PR team
every now and again about,
>> but I'm telling you, it's just I think
Live Arcade
could still be useful in 2026 and beyond
given prominent placement. Give it its
own tab on the dashboard like Game Pass
has its own tab and you curate that with
editorially minded voices within
Microsoft, you know, as it was back in
the day where when you know you are
getting a cool selection of like four or
five games in a given week of like hey
here's our it's it's live arcade
Wednesday here's here's what's out you
know here's what we've got for you this
week so I just wanted to throw that out
there um but yeah like I I put this out
on my social on Twitter the other day
and I I gotta say I got a ton of really
great thoughtprovoking Excellent
responses
cuz and the thought was is
and I I've started to bring this up
earlier and it's is Game Pass. Miranda,
you you started to go down this road as
well. I don't know if Game Pass in its
current form
is compatible
with
the idea of exclusives coming back to
Xbox. And again, I'm not for anybody
listening, I'm not trying to say that I
don't want exclusives back on Xbox. Uh
cuz it would be cool to have some
special stuff for the platform again.
But I just don't know if wi with all of
these margin challenges that Xbox is
having, their inability to sell games,
their inability to sell hardware,
can you have day one AAA games on your
your streaming service, your
subscription service, while also having
exclusives because I'm just not sure
that you can make up you can make the
month the revenue on that work. Like I
will say for as a pretty uninformed
perspective cuz I don't you know I don't
know I don't know exactly how much Gears
of War Eday costs to make. I know it's
pretty damn expensive cuz they've been
working on it for a long time. It's a
AAA production, but I I do have concern
about
the future viability of Gears
if the like what's the I guess what's
the metric of success for Gears of War
Eday when it clearly costs it's going to
end up costing them a lot of money to
have made by the time this thing comes
out, especially when you factor in
marketing and all that stuff when the
only place to play it is on the distant
third place console. console platform
and on the thankfully growing PC
platform
>> like so that's
and you've got Game Pass. Like are are
people going to sign up for to for Game
Pass to play Gears of War eay? They
might. But are they going to stick
around for
three, four, five months or at least at
least the equivalent price of what it
would be to purchase the game? Maybe
not. they might just subscribe for a
month, maybe two, and then be like, "All
right, I played my gears, and there's
nothing else here that I super care
about right now. I'm out." So, that's
that's where I'm I don't know the
answer, but I like we do know Asha said
in the very beginning when she first
started that Game Pass would continue to
evolve and continue to change. And I
think they're probably trying to figure
that out right now because I just don't
see how economically, again, I'm on the
outside. I don't know their their
numbers, but it to my layman brain and
eyes, I just don't see a way for Xbox
console exclusives
to coexist with Game Pass having Day One
AAA new first party releases and for
that to be any more economically viable
than the than the mess that they
currently find themselves in. M
>> it feels like they have to reckon with
these two paths that they have that like
they've went one way, right? With Game
Pass multiplatform kind of becoming more
of a
place to publish games rather than like
an exclusive console ecos system and
like we have this as an option if you
want it. And that's kind of the
direction they were moving in and now
they're like wait this isn't popular
enough like we're losing like fan base
in some way. like let's completely
change direction which is what Asha is
doing but then that kind of is at odds
with what they were building for the
past few years right and so it's like
but how do you like reckon those two
ideas and I think the unfortunate thing
I think will lead us into our next topic
a bit too is shutdowns that is the that
that is the reckoning is the reckoning
is well this is it working out in the
way we wanted financially or how we can
like like realistically manage what we
want to do. So, we're going to go
instead be back in competitive space
with console, like the console market,
like we do actually want that and PC
specifically, and uh refocus how we're
doing things instead of being a bigger,
wider kind of almost like publisher
aligned thing with with with options for
hardware and accessories. Mhm.
>> Yeah. I think uh for me I think about my
usage of game pass in this way and I
think if you take day one out that
becomes a much less exciting prospect
for me.
>> Day one is the reason why I have game
pass currently as at this point. It's
the reason I want it. Um I think the
potential fix for them could be and this
is probably not right because I think
about you know the price of a game is 70
bucks. We know that AAA games and and
kind of your marquee games are going to
be in that space. You know, I think
about how much money I've spent on Game
Pass leading up to when a release is
happening. And I've already paid for G
for Gears of Before Eay. If you think
about what I've paid over the monthly
time that a game subscription is gone,
I've paid for eBay already in that way.
But I do think the people who are coming
in and saying, "I'm going to do this for
a shorter amount of time or I'm going to
buy that subscription, play through it
really fast, and then and then do that
thing." That is a worry for a lot of
folks in that space. I think that
definitely is a a part of that
conversation in a way that that doesn't
necessarily help the bottom line for
what you want it to be. And that's the
conundrum that they're always going to
wind up being in unless they either
remove day one stuff and give you
either, you know, if you are subscribed
to that thing and you're not uh not
having those day one experiences. Maybe
potentially because you're a subscriber,
you offer them a discount
>> and say, "Hey, you don't have to spend
70 bucks on this game because you're a
subscriber." Maybe we charge you,
>> right? We charge you 50 for it as
opposed to the full 70, right? like
maybe there's a balance there where you
can kind of figure out some good
language there which then also again
keeps your your players a little bit
happier. You then don't have to think
about potentially what the the oh this
game is going to go to uh you know Sony
in this way even though it probably
should because you still need the money.
Um so it's it's really about just like
how do you balance out the value versus
what perceived value actual value and
what do you think is going to be there
for you when you subscribe to the thing.
Um, but who knows? Like again, I don't
know where they're going to go from a
pricing perspective or a space that's
going to keep people happy when all of
this bad uh, you know, these bad vibes
keep coming out, right? It's hard to
sell the thing that you want people to
to enjoy and be excited about while also
saying, "Hey, the person who just made
that thing is not even going to be here
next year or in the next four months."
Right? That makes that much harder to be
able to say out loud.
So, as Miranda alluded, um yeah, all all
of these all of this grim financial
outlook and a resetting of the business,
which is code for layoffs, uh that
appears to be happening. None of this is
official yet as of this recording. That
could change by the time you hear this,
but uh what we are staring down right
now are reports of
Compulsion Games getting shut down,
Ninja Theory
getting shut down, and potentially
Double Fine getting shut down. Um there
could be more, there could be others. Uh
these studios, I guess. Let me just let
me go through go through the news as it
was here. Um, so Compulsion is seemingly
the closest one to to actually confirmed
if it again maybe it is by the time you
hear this, but
uh they were founded in '09 by a former
Arcane developer named Gon Provost, who
I've met, super nice guy. Uh, they made
contrast in 2013, which was really good.
We Happy Few, which a lot of people
liked a lot. I thought it was
>> it was an awesome it had so much
potential. It didn't quite get there for
me, but uh there was a lot of a lot in
there. That was 2018.
>> Gearbox published that back when Gearbox
was
>> sort of doing their little
experimentation as a publisher.
>> Then Microsoft bought them. Uh and when
we finally got South of Midnight last
year, which got excellent reviews, and I
played a bit of it, that excellent game.
had had a great time with it.
>> Award-winning.
>> Yes, multiple awards. Absolutely. It won
some awards. So, uh this is Kotaku is
reporting that the compulsion layoffs
may total more than 90 staff. Uh just
months after the studio advertised jobs
for a new IP. Now, Kotaku said one
source indicated Compulsion leadership
is in negotiations with Microsoft over
the studio's fate.
And uh that's kind of the same situation
with Ninja Theory and Double Fine who
are reportedly
negotiating with Microsoft to
potentially go independent. Now that has
there are all sorts of like big money
questions that have to get answered is
you know. Thanks for checking out this
clip from Unlocked IGN's weekly Xbox
show. If you enjoyed it, don't forget to
watch the full episode at
youtube.com/ignames.
New episodes of Unlock drop every
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