Former Forza Horizon Director Links Xbox Layoffs to Game Pass Subscriber Shortfall

Xbox is in the middle of what CEO Asha Sharma calls the most significant restructure in the division's history, and the fallout has a clear through-line according to someone who helped build one of the platform's flagship franchises. Mike Brown, the former creative director of Forza Horizon 5 at Playground Games, argues that the layoffs, studio spin-offs, and project cancellations now sweeping through Microsoft Gaming are the direct consequence of Game Pass failing to reach the subscriber scale required to make the business model pencil out. The service, which Microsoft bet the farm on as its primary growth engine for Generation 9, simply did not attract enough paying users at the price points needed to sustain the massive content acquisitions — including the $69 billion Activision Blizzard deal — that were meant to keep the pipeline full.

The numbers paint a stark picture. Microsoft entered this console generation with a smaller install base than its rivals and a higher cost structure, so the company doubled down on Game Pass, multi-platform publishing, and a broader portfolio of first-party content. Those bets created meaningful value, Sharma has acknowledged, but they did not grow at the pace leadership expected. The Wall Street Journal reported that Microsoft internally targeted roughly 77 million Game Pass subscribers by this year, with a longer-term ambition of 100 million by 2030. The service currently sits at about 30 million subscribers, up from at least 34 million as of February 2024, and generated nearly $5 billion in revenue by July 2025. That revenue figure is substantial, but it falls well short of what a $69 billion acquisition demands in return.

The Human Cost of a Missed Target

During the last quarter, Sharma has cut 1,600 positions across Xbox, and he’s slated another 1,600 for the coming fiscal year. Four studios have already left Microsoft’s umbrella, and a fifth is on the horizon. Brown—who departed Playground Games to launch Maverick Games and is now developing the open‑world racer Clutch—spares no detail about how the shake‑up hurts people. “We’re going to see studios shut down or spun off, and folks are losing jobs,” he told the MinnMax podcast. “It comes from a well‑meaning, player‑focused idea for Xbox Game Pass that didn’t quite land.” Those who joined or were bought under the promise of a subscription‑driven future now feel the reset like a broken agreement.

Brown's perspective carries weight because he lived the acquisition strategy from the inside. Playground Games was folded into Xbox Game Studios in 2018, part of a wave of purchases intended to secure a steady cadence of exclusive titles for Game Pass. The logic was straightforward: more studios meant more games, more games meant more subscriber retention, and retention at scale would fund the whole flywheel. When the subscriber curve flattened, the flywheel reversed. "They've honestly invested a fortune in the concept of Game Pass as a service, which led to loads of teams being acquired, loads of games being funded, loads of people getting jobs, all with a vision of getting regular games landing in this service for players," Brown noted. "The reality is not enough people have subscribed to it at the prices that they needed to pay in order to make that business viable."

Microsoft’s Staggering $30B Gamble Backfires

What makes Brown's critique notable is that he does not blame the product itself. He calls Game Pass a good idea — affordable, player-friendly, capable of funding diverse games that might never get greenlit under a traditional retail model. "Let's have a subscription, make it affordable, try and get games to more people. We'll have a really diverse selection of games on there. We'll get a load of studios involved. We'll make some games that probably couldn't exist otherwise," he said. "And if more people had subscribed, that makes enough money and it works, and all of those studios go on and those games get made again and those teams will make other games. Unfortunately, it didn't." The tragedy, in his view, is that the concept worked for players but failed the spreadsheet.

Sharma's own comments echo that tension. "Our business today is not healthy," she told staff when announcing the cuts. "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." The admission that leadership kept doubling down while the core business eroded is rare for a platform holder, and it underscores how far the projections missed.

Xbox's Quiet Game Pass Gambit

After taking over from Phil Spencer, Sharma’s first move was to cut Game Pass prices and pull Call of Duty from its day‑one lineup—a sharp reversal that flipped a service once billed as the crown jewel of first‑party blockbusters. In a Bloomberg interview, she said Xbox had “been able to reset Game Pass after an eight‑month decline” and that the subscription now “has returned to growth and expanding retention.” She added that the team is “starting to get back to being closer to our players and our community.” The real question remains: will this reset steady the business, or simply stall the decline that hangs over every studio still under the Xbox banner?

The comparison to PlayStation Plus is now unavoidable. Sony's service does not launch first-party games day one, opting instead for a legacy catalog and curated newer titles. If Microsoft follows that model — holding back The Elder Scrolls 6, the next Halo, or future Fallout entries — the fundamental pitch of Game Pass changes. Subscribers who joined for day-one access to Bethesda and Activision Blizzard titles may find the value proposition thinning. Microsoft has signaled a doubling down on its biggest franchises, promising more Fallout more quickly, but the cadence and delivery mechanism remain unclear.

Xbox Studios After the Bloodbath

For the developers still inside the organization, the immediate future is uncertain. Brown put it bluntly: "I don't know the number it needed to hit was, but it never reached the number that would make a $70 billion acquisition of Activision Blizzard make financial sense. It's really unfortunate. We don't know what the future is just yet, but it is a reshaping of the business around that, after the first concept didn't quite land." That reshaping is already underway — leaner, more focused, and less reliant on a subscription metric that proved elusive. Whether it produces better games or simply fewer of them is the question every Xbox player should be asking.