By Ari Notis Published Jul 6, 2026, 7:00 PM EDT Analysis 2026's price reduction is starting to make sense
What's happening at Xbox? Every change, rumor, and canceled game in a turbulent month Xbox wanted 77M Game Pass subscribers by 2026 — today it has less than half that Arcane fans get a little more Jinx as a gift What the big Xbox restructure means for Game Pass Image: Xbox Sign in to your Polygon.com account Xbox as we know it is about to look very different, CEO Asha Sharma announced Monday in a publicly distributed memo detailing the company’s new plans. 3,200 layoffs. Four (maybe five) studio divestments. Sweeping changes to management structures. And broad implications about how Xbox will approach its business over the next 12 months.
Amid it all, Game Pass, Xbox’s games-on-demand service and the linchpin of its strategy in the post-COVID era, was curiously absent from today’s announcement, at least explicitly. In her memo to staff, Sharma mentioned “Game Pass” just once, in a paragraph that can most generously be read as a skewering of former CEO Phil Spencer’s decade-long regime:
"Our business today is not healthy. We are operating at margins that are 3-10x lower than comparable platform and publishing businesses. We entered Gen 9 with a smaller install base and a higher cost structure. To grow, we bet on Game Pass, multi-platform, and a broader portfolio of content. While those businesses have created meaningful value, they did not grow at the pace we expected. As that happened, our core business weakened, and we added more teams, more investment, and more time, hoping for a better outcome. And now the industry is facing the most severe hardware crisis in its history. We must reset XBOX."
In that reset, Game Pass isn’t going anywhere. Xbox still plans to invest in the service, Game File’s Stephen Totilo reported , citing a source familiar with the company’s plans (in addition to the fact that Game Pass generates $5 billion a year in revenue). But a year from now, Game Pass will likely look much different.
The most immediate likely impact is to a longtime perk for the service: For years, Xbox has put its first-party games available day one. But with fewer companies making first-party games, that perk will have less going for it.
Four studios — Compulsion Games, Double Fine Productions, Ninja Theory, and Undead Labs — will no longer be part of Xbox Game Studios . And the fate of Arkane Studios, which is based in France, is unclear while Xbox explores “potential strategic options” in accordance with French labor laws. Since Xbox’s big acquisition spree in the late 2010s, those studios have released the following games day one on Game Pass, marking a notable addition to the service's day-one offerings:
Undead Labs did not release a single game while under Xbox’s watch, though is currently working on State of Decay 3 , planned for a 2027 release. Ninja Theory has Senua in the works for a 2027 release too. Both games were shown at Xbox’s June 2026 showcase . And Sharma’s Monday memo noted that transitions to new ownership will allow the studios to “complete and grow” both games as well, in addition to nodding toward Compulsions and Double Fine’s “next games.” It’s possible Xbox could still cut deals with all four studios to launch whatever they make next on Game Pass.
But the move away from day-one releases is in line with Xbox’s messaging from the past few months. This year’s Call of Duty, Modern Warfare 4 , won’...