A new report offers some insight into how Microsoft planned to use Call of Duty to offset declining revenue from XBOX Studios. However, it backfired when Call of Duty: Black Ops 7 led to an off year for the franchise.
XBOX is in the midst of major changes in 2026. The shuffling of the executive structure, which led to Asha Sharma becoming CEO of the brand, has resulted in some positive changes and momentum. Still, tough decisions must be made, and it was recently revealed that mass layoffs are planned for July 2026. Now, a new report examines some of the dominoes that fell for Microsoft’s gaming division to get to this point.
Call of Duty Sales Decline Added to XBOX’s Challenges
A report from Jez Corden of Windows Central notes that Microsoft had been using profits from Activision-Blizzard to subsidize the XBOX brand, but after Call of Duty had an off year, it added another issue to the pile XBOX faced.
“Putting Call of Duty into XBOX Game Pass cannibalized both sides. As players fled the $30 price tag, there was less money for XBOX Game Pass to subsidize Call of Duty’s cannibalized sales for those who remained. The model broke under its own weight and had to be reset back to its lower price, wiping out a year or more of growth,” the report notes. “With XBOX unable to acquire hardware to sell to find new members in XBOX Game Pass, which has been the pot of money XBOX has been using to subsidize other parts of the business, once again, the model began to break down.”
Moving forward, XBOX has already begun adjusting its approach. Games like Gears of War: E-Day will be console exclusives moving forward. However, the top-tier games will also be playable on its Xbox Game Pass. In his report, Corden considers what could be done to help reverse course at XBOX. One such pitch involves removing some of the Heavy Hitters from the Game Pass service to potentially increase profits from Standalone sales. The example he uses is Forza Horizon.
He also suggests adding another premium tier to the service where you pay a bit more, but you can pick some premium games as part of your subscription, such as Call of Duty or an added-on World of Warcraft subscription.
In the past, it was reported that an ad-supported Game Pass tier was considered a cheaper entry-level option for players. It’s also been considered that Netflix could be bundled in with a Game Pass subscription. Learn more about that here.
Another major issue XBOX is facing, of course, is the rising price of memory components. Recently, XBOX CSO Matthew Ball noted that the company was reassessing its approach to the next-generation console, Project Helix. Learn more about that here.
Sound off about this story and all others in our official Discord server. Also, don’t forget to sign up for our weekly newsletter.
Comments