Microsoft CEO Nadella Says Xbox Needs Sustainable Business Model Amid Major Restructuring

Microsoft CEO Satya Nadella has said the company's Xbox division must "invent" a sustainable business model to expand its reach with games, speaking on the Sources Podcast about the major restructuring underway at the gaming division.

Nadella called the "streamlining" enacted by new Xbox chief Asha Sharma "great to see," referring to layoffs affecting thousands of employees and the closure of multiple studios. He expressed confidence in Xbox's existing studios and IP portfolio, stating: "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 CEO outlined Xbox's dual strategy of operating as both a publisher and platform provider across PC and console. "We have to invent the right sustainable business model that allows us to deliver gaming to more and more people," Nadella said. "And I think 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."

In July, Xbox announced 3,200 job cuts and the divestment of five studios. Last week, an additional 268 roles were eliminated as Microsoft reorganized its games division, moving Halo, Rare, and Age of Empires under Activision's umbrella. Xbox's chief content officer Matt Booty confirmed that two separate agreements with Ninja Theory fell through, leading to a proposed studio closure, while consultation with Arkane Studios continues.