Former Blizzard President Mike Ybarra has recently shared his concerns about Xbox's current strategic direction, suggesting the company appears uncertain about its core identity. Having previously served as Corporate Vice President at Microsoft, Ybarra continues to actively comment on gaming industry trends since leaving his executive roles.

Microsoft's gaming division has experienced significant fluctuations in recent years. While Xbox's overall revenue saw a 43% increase in Q1 FY2025, its hardware sales plummeted by 29%. This follows a previous 42% year-over-year decline between 2023 and 2024, creating a stark contrast with the continued growth of its software and services business.

Through social media, Ybarra advised Xbox to "clearly define its strategic focus and maintain consistency." While expressing his continued support for the brand and acknowledging the talented team at Xbox, he emphasized the need for swift strategic realignment. This urgency appears justified given Microsoft's reduction of nearly 3,000 Xbox-related positions since 2022.

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Ybarra specifically recommended that Xbox prioritize its publishing operations over hardware manufacturing. Microsoft achieved recognition as the world's leading game publisher in December 2024, generating $465 million in that month alone. The success has continued into 2025 with Microsoft-owned franchises like Forza and Indiana Jones performing exceptionally well on PlayStation platforms.

Despite the hardware segment's challenges, Microsoft remains committed to console development. The company recently introduced the Asus-produced ROG Xbox Ally to enter the handheld market and has promised that its next-generation console will represent the most significant technological advancement in Xbox history.