Microsoft CEO Satya Nadella has praised ongoing streamlining and job cuts across Xbox under Xbox CEO Asha Sharma, stating he feels fantastic about the company’s intellectual property portfolio and upcoming slate of games as the division reorganizes its studios and platform strategy.
The leadership at Microsoft has doubled down on sweeping structural changes across its gaming division. During a wide-ranging interview on the Sources Podcast with Alex Heath, Microsoft chief executive Satya Nadella addressed the state of Xbox following months of workforce reductions and internal reassignments.
Nadella characterized the workforce reductions as necessary restructuring managed by the division’s leadership to streamline the team. The remarks follow an extensive wave of restructuring initiated earlier this year under Xbox CEO Asha Sharma, which initially eliminated 1,600 jobs in July alongside plans for further cuts before the close of the fiscal year.
Studio Reorganizations and Ownership Shifts
The restructuring initiative has radically altered how Microsoft’s first-party developers are organized.
Obsidian Entertainment has been placed under Bethesda’s control, while other core properties and development houses have been reassigned directly to Activision teams. These include Rare, World’s Edge, and Halo, the latter of which has absorbed significant operational adjustments amid sweeping reductions.
At the same time, several teams have transitioned entirely out of the corporate ecosystem. Developers such as Double Fine and Compulsion Games have been permitted to regain full independence, while Undead Labs has also transitioned out of direct Microsoft ownership while continuing work on the third entry in the State of Decay franchise.
Individual Impact and Leadership Responses
The human cost of the restructuring has drawn sharp scrutiny from developers and former executives alike. Personnel changes have hit high-profile projects immediately after internal milestones, illustrating the volatility within the division as reported by Insider Gaming.
“Promoted and laid off in the same week is pretty wild. I’m one of the many hit by the Halo Studios layoffs. I’ll be taking some offline time today but very much would love to talk to anyone looking for Cinematic Direction or Production roles.”
Josh Daniels, cinematic director at Halo Studios
Other industry veterans have questioned the underlying economics driving the continuous cycle of downsizing and rehiring.
Long-Term Goals for Growth and Platform Expansion
Despite external criticism regarding the handling of the cuts, executive leadership maintains that the reset is designed to secure long-term viability. Nadella emphasized that the brand remains committed to its dual identity as both publisher and platform provider across personal computers and consoles.
“I feel fantastic about the IP we have right now. 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. There’s a certain 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.”
Satya Nadella, Microsoft CEO
Nadella reiterated that Asha Sharma and her team are executing a structured plan intended to return the gaming division to growth during the upcoming fiscal year.
