Microsoft CEO says Xbox must become sustainable business after 25 years of investment

Microsoft chief executive Satya Nadella told Hard Fork that, after 25 years of investment, Xbox must transition to a sustainable, profit-generating operation. He noted that the company has historically subsidized the platform and that external services such as YouTube are currently monetizing Xbox games more effectively than Microsoft itself.

Asha Sharma, who became Xbox CEO 100 days ago, said she will use the next 100 days to reassess the division’s strategy and ensure it meets fan expectations for both hardware and publishing. She emphasized the need to innovate while maintaining economic viability.

"We've invested a lot. No one can accuse Microsoft of not having invested for the last 25 years. And now we have to turn this into a sustainable business that delivers what is fundamentally one of the best sources of entertainment," Nadella said.

Nadella added that Sharma and other executives must define a new model that integrates Xbox’s various platforms—including consoles, PCs, mobile, and cloud—while addressing rising costs linked to semiconductor shortages and higher component prices. He described these supply-chain pressures as temporary, but said the need for a clear Xbox business model is permanent.

Project Helix, which aims to let users play PC games on Xbox consoles, is cited as a step toward unifying the ecosystem. However, Sharma indicated that Xbox can currently support only one or two exclusive titles, such as the upcoming "Clockwork Revolution," until the business improves. She also expressed a focus on investing in major franchises like Halo, Fallout and The Elder Scrolls, while scaling back funding for smaller projects.

The changes are expected to take time before they impact Xbox’s financial performance, and the division will continue operating under the new leadership while the new strategy is implemented.