Microsoft CEO Satya Nadella says he feels “fantastic” about Xbox, even as the division continues to cut jobs and shutter studios. Speaking on the Sources podcast with Alex Heath, Nadella praised the “streamlining” work being done by Xbox CEO Asha Sharma, just days after another round of layoffs hit the company.
“I feel fantastic about the IP we have right now,” Nadella 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. There’s some amount of streamlining the team is doing, and Asha is doing, which is great to see.”
The praise comes as Xbox faces one of the most aggressive periods of change in recent memory. Studios are merging, moving under new management, and closing altogether, while thousands of employees have lost their jobs.
Nadella’s Full Statement
Nadella’s comments were direct and positive. He framed the restructuring as a necessary step toward a sustainable future for gaming.
“And 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 for games across both PCs and Xboxes.”
He also pointed to Sharma’s stated plans for the company. “So that is sort of our goal, and I think Asha and the team have said that Xbox is going to 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.”
The Layoffs So Far
The restructuring began in July, when Sharma announced job cuts affecting 3,200 employees. Of those, 1,600 layoffs were effective immediately.
Some first-party studios were given permission to become independent again. Double Fine and Compulsion Games were among those permitted to go independent.
Since then, the picture has grown darker. Rumours of more imminent job cuts at Xbox were later confirmed as another 268 layoffs. There is also what appears to be the impending closure of British studio Ninja Theory.
Organisational changes have reshuffled entire divisions:
- Obsidian moves under Bethesda’s control
- Playground and Turn 10 merge
- Undead Labs goes independent
- Rare, World’s Edge, and Halo move under Activision’s control
It is emerging that Undead Labs has also suffered major layoffs, along with Age of Empires and Mythology developer World’s Edge.
The Studios Caught Up
The scale of the changes is striking. Here is how the restructuring breaks down by studio and what has happened to each:
| Studio | What Happened |
|---|---|
| Ninja Theory | Impending closure |
| Undead Labs | Major layoffs, independence |
| Age of Empires / Mythology | Major layoffs |
| World’s Edge | Under Activision’s control |
| Rare | Under Activision’s control |
| Halo | Under Activision’s control |
| Playground | Merged with Turn 10 |
| Turn 10 | Merged with Playground |
| Obsidian | Moves under Bethesda’s control |
| Double Fine | Permitted to go independent |
| Compulsion Games | Permitted to go independent |
The Numbers Behind the Cuts
Sharma’s July announcement was described as the “most significant” restructuring the company had ever undertaken.
The immediate 1,600 layoffs were effective immediately. The remaining cuts have come in waves since, with the latest round confirming 268 more job losses.
The Contrast Between Words and Reality
Nadella’s optimism sits uncomfortably with the reality on the ground. He speaks of “fantastic” IP and “great to see” streamlining, even as studios close and staff lose their jobs.
The contrast is stark. One executive is praising the efficiency of the cuts, while another group is losing their livelihoods.
The restructuring is real, and the numbers are large, but the CEO’s praise sounds more like comfort than leadership.
The Growth Target
Sharma and her team have said Xbox is going to get back to growth this next fiscal year. That is the plan they are executing on.
Whether the plan works remains to be seen.
For now, the message from Nadella is clear: the cuts are painful, but they are part of a larger strategy.
The question is whether the plan works. Growth in the next fiscal year is the stated goal, and the company has said it is executing on that plan.
Until then, the words ring hollow.
See the video the story is built around at Eurogamer.
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