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

GamesIndustry.biz says Microsoft CEO Satya Nadella believes Xbox now has to “invent” the right sustainable business model if it wants to keep expanding its audience. He framed the goal as being both a strong publisher and a platform provider across PC and Xbox, while also backing the current restructuring under new Xbox chief Asha Sharma.

That restructuring has been severe. Microsoft announced 3,200 layoffs in July, with roughly half taking effect immediately, alongside plans to divest five studios. Another 268 roles were cut last week, and the games division was reorganized so Halo, Rare, and Age of Empires now sit under Activision’s umbrella.

For developers, the practical takeaway is that Xbox is still in a period of operational reset: fewer teams, shifting reporting lines, and pressure to justify growth through a broader business model rather than just hardware or first-party output. Nadella said he feels good about the studio and IP portfolio, but the company is clearly trying to align its game business with a more scalable, platform-led strategy.

The exact long-term shape of that strategy remains open, but the message is clear enough: Microsoft wants Xbox to grow again next fiscal year, and it expects the business to do so while producing fewer, better-supported games.