Microsoft CEO Satya Nadella has broken his silence on what is happening inside Xbox. Speaking on the Sources Podcast with Alex Heath, he said he feels “fantastic” about the IP Xbox currently holds, and described the “certain amount of streamlining” run by Xbox CEO Asha Sharma as “great to see” – a comment that lands right in the middle of the division’s ongoing job cuts.
What Nadella actually said
The interview ran for 53 minutes and was mostly about Copilot, Microsoft’s use of AI and Nadella’s personal views on AI regulation. Xbox only came up near the end, around the 47-minute mark, when he was asked about the division’s current transformation and its 2026 “reset.”
- Gaming is, in his words, part of Microsoft’s “core DNA.”
- He feels “fantastic” about the IP lineup Xbox has right now.
- The streamlining Asha Sharma is carrying out is “great to see.”
- Xbox needs to “invent the right sustainable business model” that lets it bring games to “more and more people” – something he frames as the company’s long-standing goal.
- As Xbox returns to growth by the next fiscal year, he hopes the publisher will “do a bang-up job of producing some great games.”
The “streamlining” he referred to is the wave of layoffs set to affect 3,200 Xbox employees by the end of the fiscal year.
The timing is what stings
The episode went live on September 25, just three days after Xbox Chief Content Officer Matt Booty publicly announced the second wave of layoffs to hit the division this year. That round cost 268 people their jobs, and we covered it in detail in our report on the second wave of Xbox layoffs.
Halo Studios reportedly took the worst of it as the Halo IP moves under Activision’s control. Age of Empires studio World’s Edge was hit too – its creative director and other leadership figures were laid off and the studio’s next project was canceled. Hellblade developer Ninja Theory is now facing closure, with two ownership deals reportedly collapsing in recent months.
Who is Satya Nadella
Nadella joined Microsoft in 1992 and worked on a range of high-profile projects, most notably leading the company’s push into cloud services. He became Microsoft’s third CEO in 2014 after Steve Ballmer stepped down, and in that same year he oversaw the acquisition of Mojang, the Swedish studio behind Minecraft.
What it means for you
For players, the practical takeaway is simple: Microsoft’s top boss is publicly backing the current restructuring and is pointing at the next fiscal year as the moment Xbox should be back in growth. He is not promising specific games, a specific release schedule or a specific business model – only that a sustainable one still has to be invented. Whatever shape that takes, it will be defined by a smaller Xbox than the one that existed at the start of the year.
Where to go next
If you want more context on how the rest of the industry is moving, we track it in our gaming news section, and we also wrote separately about the studio statement around Marathon and Destiny 2.
FAQ
He called the “certain amount of streamlining” being done by Xbox CEO Asha Sharma “great to see.” He did not use the word layoffs himself, but the streamlining he referred to is the job-cut program affecting Xbox.
A total of 3,200 Xbox employees are set to be affected by the end of the fiscal year. The most recent round, announced by Chief Content Officer Matt Booty, accounted for 268 of them.
Halo Studios reportedly took the brunt as the Halo IP moves to Activision’s control. World’s Edge, the Age of Empires studio, lost its creative director and other leadership and had its next project canceled. Ninja Theory, the Hellblade studio, is facing closure after two reported ownership deals fell through.
Nadella pointed to the next fiscal year as the point at which Xbox should be growing again, and said he hopes the publisher produces great games in the process.
Nadella spoke to Alex Heath on the Sources Podcast in a 53-minute episode published on September 25. The Xbox segment appears around the 47-minute mark.