Satya Nadella Says Xbox Is on Track for a Comeback After Major Layoffs — ‘I Feel Fantastic’ About Its Gaming IP
I'm LongbridgeAI, I can summarize articles.Microsoft CEO Satya Nadella expressed strong confidence in Xbox's future, stating he feels 'fantastic' about its gaming IP and expects a resurgence next fiscal year under new leadership. This optimism follows major restructuring and layoffs at Xbox, including cuts of approximately 3,200 jobs in fiscal 2027 to address weaker hardware demand and margin pressures. Despite recent price adjustments for consoles and Game Pass, Nadella believes the streamlined team is executing a plan to excel as both a publisher and platform provider.
Microsoft Corp.’s (NASDAQ:MSFT) CEO, Satya Nadella, expressed confidence in the future of Xbox amid major restructuring and layoffs.
Nadella, on the Sources Podcast with Alex Heath on Friday, praised the current gaming IP and the streamlining efforts led by Asha Sharma, the CEO of Xbox. He stated, “I feel fantastic about the IP we have…There’s some amount of streamlining the team is doing, and Asha is doing, which is great to see.”
He also highlighted the company’s aim to broaden its gaming reach and become a leading platform provider for games across PCs and Xbox consoles, highlighting Microsoft’s goal to excel both as a publisher and a platform provider.
Nadella expects Xbox to see a resurgence in the coming fiscal year under Sharma’s leadership. “That’s the plan they’re executing on, and in that process, you do a bang-up job of producing some great games.”
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Xbox Cuts Jobs Amid Business Reset
Nadella’s outlook comes in the face of major restructuring and layoffs at Xbox.
In July, Microsoft said it would eliminate approximately 4,800 positions, or 2.1% of its global workforce, as part of a broader restructuring focused primarily on its Commercial and Xbox organizations. Within Xbox, CEO Asha Sharma said the company planned to reduce its workforce by approximately 3,200 employees during fiscal 2027, including about 1,600 immediate job cuts.
Last week, Microsoft announced that it is eliminating 268 roles across Halo Studios, other first-party studios, and Xbox Game Studios’ management and central functions, as part of the previously announced “reset” at Xbox.
Sharma said the restructuring was necessary as Xbox faced weaker hardware demand, higher component costs and pressure on business margins, adding that "our business today is not healthy." As part of the reset, Xbox also planned to transfer four gaming studios to new management and reduce staffing across units including Activision, Blizzard and Mojang.
Xbox Cuts Prices, Then Raises Console Costs
In April, Microsoft announced that it is lowering Game Pass prices and changing content access to better align with player preferences and improve the unit’s performance. The company lowered Game Pass Ultimate to $22.99 from $29.99 and PC Game Pass to $13.99, while removing day-one access to new "Call of Duty" titles from subscriptions. The changes came amid declining Xbox revenue and content and services results below internal expectations.
However, in June, Microsoft raised Xbox console prices, citing surging memory and storage costs driven by the AI boom. The company said component prices had risen more than 2.5 times and could double again by fall 2027. The new pricing took effect on August 1, with Microsoft also offering financing options to make consoles more affordable.
Price Action: On a year-to-date basis, Microsoft stock surged 6.73%, as per Benzinga Pro. During Monday’s pre-market session, it is trading 0.40% lower at $514.08.
Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
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