Nadella Confident in Xbox Future Amid Restructuring

Microsoft CEO Satya Nadella says he feels fantastic about Xbox's future. He expressed full belief in the division's intellectual property portfolio and its ability to produce great games .

Nadella made the comments in an interview on the Sources podcast. He framed significant ongoing organisational changes as part of a deliberate plan.

Leadership defends restructuring as path to growth

Nadella praised Xbox CEO Asha Sharma's efforts to streamline the company. "There's some amount of streamlining the team is doing, and Asha is doing, which is great to see," he said. He stated that Sharma and her team have a plan to return Xbox to growth in the next fiscal year. Nadella is very happy with the results the team is producing and feels great about the changes being executed.

Studio realignments and layoffs reshape first-party lineup

Recent organisational changes have substantially reshaped Xbox's first-party studio network. Several major entities have been moved under the control of Activision, which Microsoft owns. The Halo franchise, Rare, and World's Edge, the studio behind Age of Empires and Mythology, now report through that structure. World's Edge suffered layoffs as a result.

Other studios have been merged or set independent. Playground Games and Turn 10 Studios have been merged into a single entity. Undead Labs, which became independent, also suffered major layoffs. Some studios, including Double Fine and Compulsion Games, were permitted to go independent again after earlier announcements.

These moves followed a new wave of job cuts confirmed a few months after over 1,000 employees were laid off. In July, Asha Sharma announced cuts affecting 3,200 employees, which she described as the most significant restructuring Xbox had ever undertaken. Of those, 1,600 were effective immediately. Rumours of more imminent job cuts were later confirmed, with another 268 layoffs at Xbox verified. The impending closure of British studio Ninja Theory was also mentioned.

Criticism persists amid leadership’s positive outlook

Despite the leadership's positive framing, the changes have drawn criticism. Developers have criticized Xbox for setting unrealistic expectations for its studios. An ex-Microsoft executive has also criticized Asha Sharma's leadership. Nevertheless, Microsoft's top leadership appears content with the cost-cutting measures being applied.

Nadella redefines Xbox’s role as platform and publisher

In his interview, Nadella outlined a strategic vision for Xbox. The goal is to be a great publisher and platform provider for games across PCs and Xbox consoles. He stated the division is trying to invent the right sustainable business model to deliver gaming to more people. "I feel fantastic about the IP we have right now," Nadella said.

Xbox is now executing a plan to achieve growth and produce great games. This is central to Asha Sharma's strategy to return the division to growth in the next fiscal year.