Xbox CEO Says Game Pass Price Cuts Are Working - But Warns of ‘Hard Choices’ Ahead

When Microsoft raised Game Pass Ultimate from $19.99 to $29.99 per month in October 2025, a roughly 50 percent increase, the backlash was immediate. Subscribers cancelled in droves, growth stalled, and the company’s flagship gaming subscription service entered its most turbulent period since launch. Six months later, new Xbox CEO Asha Sharma executed a dramatic U-turn. She slashed prices back to $22.99 for Ultimate and $13.99 for PC Game Pass, and pulled day-one Call of Duty titles from the service as a trade-off. Now, with early internal data showing acquisitions rising and retention improving, Sharma has described the move as “a good first step.” But her own internal memo, first reported by The Verge and later confirmed by Xbox leadership, warns that the real work is only beginning, and that “hard choices” are coming.

The Price Hike That Backfired

The October 2025 price increase was the boldest test of Game Pass subscriber loyalty yet. Microsoft raised Ultimate by $10 per month and PC Game Pass to $16.49, while simultaneously adding perks like Fortnite Crew and Ubisoft Classics to soften the blow. For months, the company defended the hikes as necessary to sustain the service’s growing library of day-one releases, including blockbusters from the newly acquired Activision Blizzard catalog.

The market had a different answer. According to an internal memo from Sharma obtained by The Verge and corroborated by other outlets, a memo Sharma did not dispute, “growth slowed down and subscriber loss accelerated after the pricing and SKU changes last year.” Subscriber growth reversed, and Microsoft was forced to confront the reality that its subscription model had hit a ceiling. The company had not disclosed Game Pass subscriber numbers since early 2024, when it reported 34 million across all tiers. That opacity meant the full extent of the damage was hidden from public view, but the internal data was clear: the price hike was a strategic misstep.

Sharma’s Bold Reversal, Price Cuts and Trade-Offs

Asha Sharma took over as CEO of Microsoft Gaming in February 2026, replacing the retiring Phil Spencer. A former AI executive at Microsoft, she came with a reputation for data-driven pragmatism. One of her first major moves was to acknowledge publicly, and internally, that Game Pass had become too expensive. In April 2026, she reversed course.

Ultimate dropped from $29.99 to $22.99 per month, bringing it close to its pre-hike level. PC Game Pass fell from $16.49 to $13.99. But the price cuts came with a significant concession: new Call of Duty titles would no longer launch day-one on Game Pass. Call of Duty had been the crown jewel of the Activision acquisition and a key reason many subscribers had signed up in the first place. Removing it from the day-one lineup was a gamble, but the early data suggests it paid off.

Sharma reported that since the cuts, “acquisitions grow and retention improve.” Industry analysts at Ampere Analysis described the move as an “inevitable correction” that would drive subscriber growth and reduce churn. The reversal signaled that Xbox leadership was willing to listen to its audience, and to abandon a pricing strategy that had alienated its core user base.

“A Good First Step”, What Sharma’s Warnings Really Mean

Sharma’s internal memo was careful not to declare victory. “Since our price reduction we have seen acquisitions grow and retention improve, which is a good first step,” she wrote. The phrasing is deliberate. For Sharma, “a good first step” is not a victory lap; it is a nod to the fact that turning Game Pass around will require sustained effort and difficult decisions.

She warned that “hard choices” are ahead. What those choices look like remains speculative, but Sharma’s background offers clues. Before leading Xbox, she oversaw AI initiatives at Microsoft, and her early tenure has been marked by a willingness to cut underperforming projects, she killed the Copilot for Gaming AI assistant and dropped the “Microsoft Gaming” branding in favor of a return to “XBOX.” She also reorganized the platform engineering team. These moves suggest a leader who prioritizes focus and efficiency over expansion for its own sake.

The “hard choices” could include further price adjustments, restructuring subscription tiers, or reassessing which titles launch day-one on Game Pass. The removal of Call of Duty from day-one access may have been a test case. If subscriber growth continues to improve without the tentpole franchise, Microsoft might extend that logic to other major releases. Conversely, if retention falters in the long run, the company could face pressure to bring Call of Duty back, at the risk of another price hike.

Beyond Game Pass, The Broader Xbox Picture

Game Pass is only one piece of Xbox’s broader challenges. Hardware revenue fell 33 percent year-over-year in the March 2026 quarter. While Microsoft has framed that decline as in line with forecasts, it underscores a stark reality: console sales are struggling. The Xbox Series X|S generation has consistently trailed PlayStation 5 in sales, and the decline in hardware revenue suggests the gap is widening. Meanwhile, rival services like PlayStation Plus have maintained steady growth, Sony reported 47.4 million PlayStation Plus subscribers as of December 2025, and Xbox’s opaque subscriber numbers make it difficult to gauge whether Game Pass can close that gap.

The leadership transition itself adds another layer of uncertainty. Sharma replaced Phil Spencer, who had led Xbox through its acquisition spree (Bethesda, Activision Blizzard) and the pivot to subscription gaming. Her appointment signaled that Microsoft wanted a fresh perspective, but it also meant discarding some of Spencer’s strategic bets, like Copilot for Gaming and the sprawling “Microsoft Gaming” identity.

Meanwhile, the true health of Game Pass remains opaque. Microsoft has not published subscriber numbers since early 2024. The 34 million figure at that time included Console, PC, and Core tiers, but growth has clearly slowed. Without transparent metrics, it is impossible to know whether the post-cut rebound is a temporary bounce or the start of a sustained recovery.

What Comes Next for Game Pass and Xbox

The immediate priority for Xbox appears to be stabilizing Game Pass as a sustainable business. Potential further price adjustments are on the table, whether that means introducing new tiers, regional pricing changes, or bundling strategies. Sharma’s memo explicitly framed the current price cuts as an early step toward recovery, not a final solution.

Another looming question is the role of day-one exclusives. Call of Duty’s removal from day-one Game Pass could be a template for other Activision titles, or it could be a temporary concession to rebalance the service’s economics. If subscriber growth holds, Microsoft may keep that policy. If it falters, day-one releases could return, but at a price.

The broader challenge is whether Game Pass can achieve sustainable growth without relying on hardware sales. As console sales decline across the industry, Xbox is increasingly positioning itself as a platform-agnostic service, accessible on PC, mobile via cloud streaming, and rival consoles. Game Pass is central to that vision, but it must prove it can generate consistent revenue and profit growth. The October 2025 price hike showed that subscribers have limits. The April 2026 cuts showed that Xbox is willing to listen. The “hard choices” ahead will determine whether Game Pass becomes the engine of Microsoft’s gaming future or an expensive experiment that could not scale.

Asha Sharma’s price reversal has given Game Pass a much-needed shot in the arm. Internal data shows subscriber acquisitions and retention improving, and the move was widely seen as a necessary correction after the disastrous price hike. But Sharma’s own cautious tone, “a good first step”, is a reminder that the service’s problems run deeper than a single price change. Hardware revenue is declining, subscriber numbers remain opaque, and the removal of day-one Call of Duty has altered the value proposition of the service. Sharma’s willingness to reverse course quickly and her background in data-driven decision-making are promising signs. But the “hard choices” she warns about will test whether Xbox can balance affordability with the investment required to keep its library competitive. For now, the early data is positive. The real test lies in whether that momentum can be sustained, and whether the next steps will be as well-received as the first one.