Xbox Hits Reset Button on Business & Netflix Has a ‘Season 2’ Problem

**SPEAKER_1** (0:00)
When demand slowed for Hydrojug, Amazon ads rising star Hayden Wadsworth pivoted.

**SPEAKER_2** (0:04)
When our bank account hit near zero, my brother Jake and I had one last shot to save Hydrojug. So we engineered The Traveler, a leak-proof cup holder-friendly tumbler.
Amazon ads enables a business to be able to expand their product shelf because of the visibility and the reach you can get.

**SPEAKER_3** (0:21)
Each week, our new-to-brand customers make up about 95% of all of our sales.

**SPEAKER_1** (0:25)
Watch Hydrojug's story at advertising.amazon.com/rising-stars.

**Neal Freyman** (0:34)
Good morning Brew Daily show. I'm Neal Freyman.

**Toby Howell** (0:37)
And I'm Toby Howell.

**Neal Freyman** (0:38)
Today, Netflix has a problem. People aren't sticking around for the second season.

**Toby Howell** (0:43)
Then Xbox is on the struggle bus and is laying off thousands. It's Tuesday, July 7th. Let's ride.

**Neal Freyman** (1:00)
Oof, last night at the World Cup, the US. Men's National Team got shellacked by Belgium 4-1, an abrupt and frankly embarrassing end to what had been a promising tournament run. Tensions were high leading up to the game after America's star striker Fuller and Baligan was allowed to play after FIFA rescinded his one-match ban. But once the teams got on the pitch, it was all Belgium for 90 minutes and a familiar sinking feeling for USA fans. And so the World Cup rolls on without the Stars and Stripes, but Toby, I'm a free agent. Who should I root for? Who is my new team?

**Toby Howell** (1:34)
I can't believe these words are coming out of my mouth, but maybe England. They had such a gutsy performance against Mexico that they won me over. Morocco is also a very solid bandwagon to get on. They have not lost an official match in regular or extra time since late 2023 34 matches unbeaten. And finally, you gotta love the Norwegians. Yes, they play England next round, but Holland is an absolute terror. I'm all in on the rowing after games. They also feel like the last true underdog left. So maybe take your attention to Norway. If you want to kind of ride the underdog.

**Neal Freyman** (2:10)
It is very frustrating because I think Norway and England are my top two and they're playing against each other. So I guess whoever wins that game, I'll ride or die with them. And now a word from our sponsor, Ultra Running. Toby, are you a shoe man?

**Toby Howell** (2:23)
I like to think I have a certain theatrical nature about me. Yes.

**Neal Freyman** (2:26)
Shoe man, Toby, not show man, because today we're talking about Ultra. They actually make shoes shaped like feet.

**Toby Howell** (2:32)
Most running shoes are narrow out the toe, but Ultra has more room for your toes so they can spread out and your feet can stay in a natural position.

**Neal Freyman** (2:40)
The Ultra Fit is designed to give you room for your toes for comfort, balance and strength. So whether you run the road, sidewalk, trail or gym, Ultra has a shoe that can fit your foot and your lifestyle.

**Toby Howell** (2:50)
Use promo code MorningBrew10 for 10% off your first pair of Ultra running shoes at ultrarunning.com/morningbrew.
That's A-L-T-R-A, running.com/morningbrew.
Remember the red ring of death from your Xbox 360? It was a sign of your console's imminent demise. Right now, the entire Xbox division looks ringed in red. After Microsoft announced it was cutting up to 20% of its workforce. It is also selling or spitting off four to five game studios that it acquired within the past decade. The gaming division inside Microsoft had been spending money like a 13-year-old in GameStop for the first time. In 2023, it bought Activision Blizzard, home to Call of Duty and Candy Crush for $69 billion, the largest gaming acquisition ever. Microsoft followed that up by buying the studio behind Fallout and Skyrim for 8.1 billion. The idea was to assemble a great catalog of games that could sell a bunch of Xboxes and a bunch of subscriptions to GamePass, Microsoft's online game store. But instead of becoming the Netflix of gaming, some boss levels rolled around. Xbox CEO Asha Sharma said, Xbox ended up losing 64 cents for every $1 invested into its game studios. Our business today is not healthy, she wrote in a memo to employees. But perhaps the final boss was AI. Microsoft is spending roughly $190 billion this year on AI infrastructure, so some resources are being redirected away from slower growing businesses like gaming. Neal, Microsoft has been in the gaming business for a quarter century at this point, but right now might be its lowest moment ever. Xbox execs absolutely torched their own business in this memo.