Microsoft CEO says Xbox restructuring is progressing well

Microsoft chief executive Satya Nadella said he is confident about Xbox's portfolio of studios and intellectual properties and described the recent restructuring of the division as a positive development. In a conversation on the Sources Podcast, Nadella referenced the new Xbox head Asha Sharma’s goal of returning the gaming unit to growth by concentrating on its most successful franchises and exploring new revenue models.

"If I look at the studios, the IP portfolio we have, and our ability to then take that and produce great games going forward, I feel fantastic," Nadella said.

He added that the ongoing streamlining under Sharma’s leadership is encouraging and that the company aims to create a sustainable model that can bring games to a broader audience.

"There’s some amount of streamlining the team is doing, and Asha is doing, which is great to see. And then we have to invent the right sustainable business model that allows us to deliver gaming to more and more people."

Nadella said the objective is to be both a strong publisher and a platform provider for games on PCs and Xbox consoles, and he noted that Sharma’s team expects the division to achieve growth in the next fiscal year while delivering high-quality titles.

The comments come after Microsoft announced two rounds of layoffs affecting up to 3,200 Xbox-related positions, with the second wave reportedly about three-quarters complete. The cuts have included reductions at Halo Studios, the transfer of the Halo franchise to Activision, and the relocation of studios such as Rare and Obsidian within the broader gaming organization. Several studios, including Double Fine, Compulsion Games and Undead Labs, have left Microsoft ownership, while others remain on the market.

In a separate interview, Double Fine founder Tim Schafer discussed the challenges of the industry’s economics, describing the cycle of layoffs and rehiring that he believes contributes to the sector’s instability.