Satya Nadella, Microsoft’s CEO, has weighed in on Xbox’s sweeping cuts and studio closures — and he calls it “streamlining.” Speaking on the Sources Podcast with Alex Heath, Nadella defended the company’s restructuring, saying it was “great to see.”
The remarks come as Xbox continues its major reorganisation. Earlier this week, the company laid off 268 people on top of the 1,600 jobs it cut earlier this year. Xbox has also pushed Obsidian into Bethesda, handed Halo to Activision, shut down Double Fine and Compulsion Games, and said goodbye to Undead Labs, the studio behind State of Decay. Ninja Theory, the developer of Hellblade, is set to close next.
All of this is part of Xbox’s “reset,” led by its new CEO, Asha Sharma. Sharma has defended the changes with statements like “great technology gets better when it gets simpler, not bigger” — a line that drew its own jokes.
Nadella’s Take on the Layoffs
Nadella started his comments by praising Xbox’s intellectual property portfolio. “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 then described the cuts as a design process for a new Formula 1 car. “There’s some amount of streamlining the team is doing, and Asha is doing, which is great to see,” he said.
What Xbox Is Actually Cutting
The scale of the restructuring is large. Here is the full list of moves so far:
- Xbox laid off 268 people on top of the 1,600 jobs cut earlier this year.
- Obsidian was pushed into Bethesda.
- Halo was handed to Activision.
- Double Fine and Compulsion Games were shut down.
- Undead Labs, the State of Decay developer, was closed.
- Ninja Theory, the Hellblade developer, is set to close next.
The Business Model Question
Nadella then pivoted to Xbox’s future plans. “Then we have to invent the right sustainable business model that allows us to deliver gaming to more and more people,” he said. “That has always been the goal, which is, we want to be a great publisher and a great platform provider to games across both PC and Xboxes.”
He added that Asha and the team have said Xbox is going to grow in the next fiscal year.
The Order of Closures
The closures are not finished. Xbox’s Chief Creator Officer Matt Booty said the company was “roughly three-quarters of the way through previously announced restructuring” when the latest layoffs were announced. That means more cuts are coming.
| Stage | Studio | Status |
|---|---|---|
| Ongoing | Obsidian | Pushed into Bethesda |
| Ongoing | Halo | Handed to Activision |
| Complete | Double Fine | Shut down |
| Complete | Compulsion Games | Shut down |
| Complete | Undead Labs | Closed |
| Pending | Ninja Theory | Set to close |
Why the Streamlining Line Lands Differently
Sharma’s previous defence of the cuts compared technology to aeroplanes. “Great technology gets better when it gets simpler, not bigger” is why aeroplanes always perform better when you rip one of the wings off, the joke goes.
Nadella’s version of the same logic applies to people. He described the restructuring as “streamlining” without addressing the human cost. Then he promised a “sustainable business model” after the reorg is complete.
What the Podcast Interview Shows
The interview was wide-ranging, but the Xbox remarks stood out for their detachment. Nadella praised the IP portfolio and the team’s work, then moved on. He did not pause to consider the thousands of people who lost their jobs.
The Aeroplane Metaphor Returns
The plan, as he describes it, is to reorganise dramatically and then figure out the business model. That is like ripping one of the wings off an aeroplane before saying “Right, how do we circumnavigate this globe thing?”
The Next Round of Cuts
Matt Booty’s statement suggests the worst is not over. Xbox is still working through its restructuring.
The Bottom Line on Xbox’s Reset
Nadella’s comments are notable for what they leave out. He speaks warmly of the IP and the team, but he does not acknowledge the pain the cuts have caused. His promise of a sustainable business model comes after the cuts, not alongside them.
That sequence is the problem. It is a formula for more disappointment, not confidence. Xbox’s fans and employees deserve better than a CEO who praises the design while ignoring the wreckage.
The layoffs continue. The closures continue. The restructuring continues. And Nadella continues to call it “great to see.”
Source material: “Microsoft CEO says Xbox's 'streamlining' process is 'great to see' following its most recent round of layoffs,” PC Gamer.
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