Microsoft's CEO Satya Nadella has stated that Xbox must develop a "sustainable business model"

Satya Nadella, the CEO of Microsoft, emphasized the necessity for Xbox to develop a viable "sustainable business model" to enable broader dissemination of its games. In a discussion on the Sources Podcast, he commented on the significant reductions that new Xbox head, Asha Sharma, has implemented, labeling the resultant downsizing—which led to substantial job losses and potential studio shutdowns—as a positive move. Nadella expressed optimism about a potential "return to growth" for Xbox in the next fiscal year (2027/28).

Nadella expressed confidence in the company's creative assets and future gaming production capabilities: "With our studios and intellectual property, I am very optimistic." He noted the ongoing "streamlining" efforts led by Asha and her team, regarding them as beneficial. He pointed out the importance of crafting a proper business model to extend gaming across PCs and Xbox consoles, underscoring Microsoft's ambition to excel both as a publisher and a platform provider.

Nadella anticipated a resurgence for Xbox in the upcoming fiscal year under Asha's leadership, highlighting their commitment to creating exceptional games as part of this growth strategy.

In July, Xbox revealed plans to reduce its workforce by 3,200 employees, implementing half of that immediately, alongside plans to divest five studios. Recently, 268 additional positions were eliminated, and Microsoft's gaming division underwent restructuring, transitioning franchises like Halo, Rare, and Age of Empires to Activision.

Matt Booty, Xbox's chief content officer, addressed these changes on the company’s Wire outlet, noting that attempts to finalize agreements for Ninja Theory were unsuccessful. As a result, they are beginning consultations about a potential closure while exploring alternative options. Ongoing discussions concerning Arkane are expected to proceed until year's end.