Xbox leadership expects Microsoft’s gaming business to return to revenue growth during fiscal 2027 as the company moves through the largest restructuring in the division’s history.

Xbox CEO Asha Sharma expressed confidence in the company’s future while outlining a broad reset involving its studios, platform teams, management structure and investment priorities.

Sharma said Xbox continues to control some of the industry’s most recognizable intellectual property and operates talented development teams around the world.

She believes those strengths can be brought together to return the business to growth during fiscal 2027.

The target follows another difficult financial period for Microsoft’s gaming division.

During Microsoft’s latest quarterly results, Xbox content and services revenue declined by 10% compared with the previous year. Xbox hardware revenue fell by 13% during the same period.

Microsoft has also acknowledged that Xbox currently operates at substantially lower margins than comparable platform and publishing businesses.

The company said Game Pass, multiplatform publishing and its expanded studio portfolio created meaningful value but did not grow at the pace originally expected.

Xbox is now attempting to simplify the organization and direct more investment toward projects with the strongest commercial and strategic potential.

The reset includes approximately 3,200 planned job reductions during fiscal 2027 and changes affecting several studios.

Compulsion Games and Double Fine Productions are transitioning back to independent ownership with their intellectual property and catalogues.

Ninja Theory and Undead Labs have entered agreements to move under new ownership, while Microsoft is reviewing strategic options for Arkane’s operations in France.

Xbox has said that none of its publicly announced first-party games are being cancelled as part of the restructuring.

Mojang and King will also report directly to Sharma. Microsoft considers both companies important because of their large monthly audiences and their ability to reach players beyond the traditional Xbox console market.

The company is also reducing management layers and attempting to simplify decision-making across its platform teams.

Despite the reductions, Xbox says it plans to invest as much in the business this year as it has during previous years, but with tighter priorities and greater financial discipline.

Microsoft continues to develop Project Helix as its next-generation Xbox hardware platform while expanding its games across console, PC, mobile and cloud services.

The company has not provided a specific quarterly revenue target for the expected fiscal 2027 recovery.

Its prediction remains a forward-looking business goal rather than a guarantee that every part of Xbox, including hardware, Game Pass and first-party software, will return to growth at the same time.

Fiscal 2027 began on July 1, 2026, and continues through June 30, 2027.