Xbox has experienced major changes in 2026, including nearly 2,000 job cuts and the closing of some game studios, according to recent reports. CEO Asha Sharma mentioned in an internal memo obtained by Windows Central that the Game Pass strategy used by previous leaders has led to a "free fall" for Xbox. The memo, revealed by Jez Corden, pointed to the inclusion of Call of Duty in the Game Pass after Microsoft's $69 billion purchase of Activision Blizzard as a key factor in the company's financial struggles. This decision reportedly caused subscription prices to increase, resulting in a loss of subscribers and a decline in Call of Duty sales. Despite these challenges, Sharma stated in her memo that Xbox is on a path to growth, with revenue now two to three times higher than before and expecting this trend to continue. She emphasized the need to reinvest in the company and highlighted the success of World of Warcraft Forever from Blizzard as a positive sign. Sharma also suggested potential changes to the Game Pass, including new subscription models that may not include day-one games and the possibility of ad-supported subscriptions. Rumors suggest a $12.99 ad-supported subscription, though this price is seen as high compared to the current Essential subscription, which costs $9.99/€8.99. Sharma acknowledged that the Game Pass had not grown as expected, with Microsoft's profit margins 3 to 10 times lower than those of similar companies. The company faced challenges with a smaller number of console users and higher costs for the ninth generation of consoles. Microsoft had previously aimed for 100 million Game Pass subscribers by 2030, but this goal now seems unlikely. The Wall Street Journal reported that Microsoft expects about 77 million Game Pass subscriptions this year, up from the current 30 million. After becoming head of Xbox, Sharma reduced the price of the Game Pass and stopped including day-one Call of Duty games. She recently told Bloomberg that Xbox had "successfully relaunched the Game Pass after eight months of decline," with growth returning and customer retention improving. However, the future of the Game Pass remains uncertain, including whether Microsoft will remove all day-one games from the subscription and whether Bethesda's The Elder Scrolls 6 and the next major Halo title will be available on the Game Pass at their release.