Nadella: Make Xbox a sustainable, revenue-generating business

Satya Nadella spoke at a Hard Fork podcast in San Francisco and said Xbox must become a sustainable, revenue-generating business. He noted Microsoft has invested in Xbox for 25 years and is now carrying out a 100-day review led by Asha Sharma to redefine the unit’s commercial model.

Nadella highlighted a shortfall in monetisation, saying “we’re not monetising that entertainment. In fact, if anything we’ve been subsidising that entertainment. In fact, there’s more monetisation of Xbox games happening on YouTube than at Microsoft.” He added Microsoft still intends to build high-quality games and hardware but must do so “in an economically sustainable way.”

On pricing, he responded that the company must find approaches to deliver games that are “economically relevant for the customer and for us.” He pointed to global supply pressures and rising component costs that have pushed up hardware prices across consumer electronics.

Nadella described semiconductor and memory scarcity as a temporary problem the industry will overcome, but said a longer-term question is what the Xbox business model should be. He observed that consoles, PCs and mobile all host players and that Xbox needs a clearer identity across those platforms.

The 100-day review led by Asha Sharma will reassess how Microsoft delivers games and hardware and explore new commercial approaches while remaining aligned with the company’s gaming history.

The interview was recorded before reports that Microsoft had considered restructuring or spinning out the Xbox business. Xbox revenue currently comes from console sales, first-party titles, subscriptions and third-party partnerships, and executives have signaled a willingness to rethink pricing and distribution as gaming consumption shifts across devices.