Microsoft CEO Nadella Defends Xbox Restructuring, Expresses Confidence in IP Portfolio

Microsoft CEO Satya Nadella has defended Xbox's recent restructuring in an interview with the Sources Podcast, expressing confidence in the division's future despite significant upheaval. Speaking at a Copilot event in Seattle, Nadella praised the ongoing "streamlining" efforts led by new Xbox CEO Asha Sharma.

"I feel fantastic about the IP we have right now," Nadella said. "If I look at the studios, the IP portfolio we have, and our ability to then take that and produce great games going forward, I feel fantastic."

The comments come as Xbox continues restructuring efforts that have eliminated thousands of jobs and resulted in several studio closures and consolidations. Nadella acknowledged the company is in the midst of significant changes while maintaining optimism about Xbox's assets and future output.

Nadella emphasized that success will depend on developing the right business approach. "We have to invent the right sustainable business model that allows us to deliver gaming to more and more people," he said. "That has always been the goal, which is we want to be a great publisher and a great platform provider for games across both PCs and Xboxes."

According to Nadella, Xbox leadership expects the platform to return to growth in the next fiscal year. "Asha and team have said that Xbox is going to get back to growth this next fiscal year, and that's the plan they're executing on," he stated. "And in that process, do a bang up job of producing some great games."

The restructuring, which Nadella characterized as necessary streamlining, marks the latest chapter in a challenging period for Xbox. The division faced criticism over leadership decisions and business strategy, with some observers citing "catastrophic mismanagement" by Microsoft and underperforming artificial intelligence investments as factors in the division's difficulties. Despite Nadella's optimistic framing, reports indicate additional job cuts may be coming.

Nadella also addressed concerns about Xbox's future as a platform. Speculation has emerged in recent years about whether Microsoft might shift to a publisher-only model, abandoning dedicated hardware. Nadella reiterated the company's commitment to both roles. "We want to be a great publisher and a great platform provider for games across both PCs and Xboxes," he said, reaffirming Xbox hardware remains part of Microsoft's long-term strategy.