Microsoft boss Nadella says Xbox has to invent "sustainable business model"

Microsoft CEO Satya Nadella has stated that Xbox needs to establish a sustainable business model to reach more players, following significant workforce reductions and studio closures. Speaking on the Sources Podcast, Nadella praised the streamlining efforts led by new Xbox chief Asha Sharma, which have resulted in thousands of job losses and the closure of several studios. He emphasized that these changes are part of a broader strategy to position Xbox for future growth. Nadella expressed confidence in Xbox’s intellectual property portfolio and its ability to produce high-quality games moving forward.

Nadella highlighted that the goal remains for Xbox to function as both a strong publisher and platform provider for games across PCs and Xbox consoles. He reiterated that the division is expected to return to growth in the fiscal year 2027/28, aligning with the plan Sharma and her team are executing. The executive also underscored the importance of delivering compelling games during this transition period.

In July, Xbox announced plans to lay off 3,200 staff, with roughly half of those cuts implemented immediately. The company also revealed plans to divest five studios as part of its restructuring efforts. These measures are intended to streamline operations and refocus resources on core priorities within the gaming division.

Additional cuts were made last week, with 268 roles eliminated, while Microsoft reorganized its games division by moving franchises such as Halo, Rare, and Age of Empires under Activision’s oversight. Xbox’s chief content officer Matt Booty noted that agreements for Ninja Theory fell through, prompting consultations on a potential studio closure, while consultations for Arkane remain ongoing until the end of the year.