Xbox admits Avowed, Outer Worlds 2, and dozens of other games fell flat
Xbox is in deeper trouble than its public messaging suggests. Windows Central / Jez Corden reports that a long list of titles missed both sales and Game Pass engagement targets, memory costs have exploded due to the AI boom, and the division is now running at just 3% profit margin — with new CEO Asha Sharma planning up to 1,000 layoffs and potential studio closures within her first hundred days.
The games that didn't land
Corden names a significant number of first-party and partner titles as underperformers. Internal studio failures include Obsidian's Avowed and The Outer Worlds 2, Double Fine's Keeper and Kiln, Ninja Theory's Hellblade II, Turn 10's Forza Motorsport, and Compulsion Games' South of Midnight. On the partner side: Minecraft Legends, Ninja Gaiden 4, Bleeding Edge, Towerborne, Ara: History Untold, and Battletoads are among those flagged.
Cancelled projects — Perfect Dark, Everwild, and Project Blackbird — added further write-offs. The closure of The Initiative studio alone hit profitability hard. State of Decay 3, announced back in 2020, only recently stabilized in development and is now targeting a 2027 release.
Fable has its own problems. Playground Games built the RPG reboot on ForzaTech, an engine designed for racing games. The studio reportedly considered switching to Unreal Engine but didn't. The result is a game now delayed to February 2027, and Xbox leadership leaning harder on proprietary internal tech to avoid third-party licensing costs.
The economics are broken
The deeper issue is structural. Memory costs have risen roughly 700% since Xbox Series X|S hardware was originally costed out, driven largely by AI infrastructure demand — demand Microsoft itself has helped fuel. The company is now losing hundreds of dollars on every console it sells, per Corden's reporting. It can't raise prices because sales are already weak.
Until recently, profits from Activision Blizzard helped absorb those hardware losses. That math broke down when recent Call of Duty releases underperformed, removing the subsidy that kept the model viable.
What comes next
Analyst speculation puts the next Xbox hardware — codenamed Project Helix — at a potential consumer price of $999–$1,500, per TechTimes, though Microsoft has not confirmed any pricing or a firm launch window beyond developer kits shipping in 2027. The traditional $500 console launch price may no longer be viable given where semiconductor costs have landed.
For players in the US and UK, the immediate question isn't which console to buy — it's whether the Xbox model survives long enough to be worth betting on. Sharma's restructuring will shape the answer.