Nadella Calls Xbox Layoffs 'Great to See' as Restructuring Hits 75%

Microsoft CEO Satya Nadella says Xbox's 'streamlining' is 'great to see' amid mass layoffs and studio closures. New Xbox CEO Asha Sharma aims for growth next fiscal year.

Ever had your boss call your team's massive layoffs 'great to see'? That's basically what Microsoft CEO Satya Nadella just said about Xbox. With Xbox now 75% through a major restructuring that's seen thousands laid off, many games canceled, and several studios closed or merged, Nadella told the Sources Podcast by Alex Heath that the 'streamlining' is 'great to see.'

Nadella didn't hold back on his optimism. 'I feel fantastic about the IP we have right now,' he said. '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.' He also praised new Xbox CEO Asha Sharma, saying 'there's some amount of streamlining the team is doing, and Asha is doing, which is great to see.'

Now, it's easy to feel good about IP when you've got Minecraft and the entire Activision Blizzard catalog—well, the people who weren't laid off—in your corner. But describing the dismantling of longstanding studios and the uprooting of thousands of lives as 'great to see'? That's a tough pill to swallow for many in the industry.

So what's next for Xbox? Nadella says the goal is to 'invent the right sustainable business model that allows us to deliver gaming to more and more people.' He reiterated, 'We want to be a great publisher and a great platform provider for games, across both PCs and Xboxes. That is sort of our goal, and I think Asha and team have said that Xbox is gonna get back to growth this next fiscal year, and that's the plan they're executing on, and in that process do a bang-up job of producing some great games.'

But there's not much meat on those bones. It's the C-suite equivalent of a coach saying, 'We'll win by scoring more points with our great players.' And Nadella, especially recently, seems to only glance at Xbox between swings of the generative AI hammer. For a deeper take, check out John Kimmich, a 16-year Microsoft veteran who was there when Xbox got started. In his view, Nadella's outlook may be part of the problem: you have to be a good platform or a good publisher, but when you demonstrably can't handle one, you certainly can't be both.

Inside Xbox, the message is clear: 'the only concrete thing they have communicated is they want higher profits, and they want it now,' says an id Software employee. So while Nadella sees 'great' streamlining, the reality for many is far from fantastic.

What do you think about Nadella's comments? Will Xbox actually get back to growth, or is this just more corporate spin? Let us know in the comments.