REDMOND — A memo sent to staff on June 10, 2026, by Xbox CEO Asha Sharma and Chief Content Officer Matt Booty announced an "Xbox reset." The memo cited challenges facing the business, including a 3 percent "accountability margin," higher component prices due to memory and storage shortages, and an "over extended" studio system.

Microsoft plans to raise prices for Xbox consoles starting August 1, 2026. The 512GB Xbox console models will increase by $100, while 1TB models will see a $150 increase. After these changes, the Xbox Series S will begin at $499.99, and the Xbox Series X without a disc drive will be priced at $749.99. The Xbox Series X with a disc drive will start at $799.99, and the 2TB Xbox Series X model will be discontinued.

Microsoft stated that console storage and memory prices have increased by more than 2.5 times. The company expects console component prices to double by fall 2027. Microsoft is reevaluating plans for the Project Helix console and is considering various structural changes for the Xbox division, including spinning it off into a separate company, making it a wholly owned subsidiary, or forming a joint venture.

Microsoft is planning layoffs within the Xbox division, with an announcement expected on July 6, 2026. The company is also considering the closure of at least five studios and the cancellation of the game Blade. However, Xbox is set to publish Hideo Kojima's game OD. Compulsion Games and Double Fine are in negotiations regarding potential spinoffs. Sharma assumed the role of Xbox CEO in February 2026.