Microsoft chief executive Satya Nadella has said Xbox must become an economically sustainable business as the company reassesses its gaming strategy and long-term growth plans.
Satya Nadella has insisted Xbox must evolve into a financially sustainable business as Microsoft navigates a challenging period for its gaming division.
Speaking during an interview with Hard Fork, the Microsoft chief executive said the company had spent decades investing heavily in gaming and now needed to ensure those investments delivered long-term returns.
Nadella said: “No one can accuse Microsoft of not having invested for the last 25 years.
“Now, we have to turn this into a sustainable business that delivers what is fundamentally one of the best sources of entertainment, still.”
His comments come as Xbox faces mounting questions over its future direction, including its exclusivity strategy, subscription model and hardware ambitions.
Earlier this month, Xbox chief executive Asha Sharma outlined plans to “reset” the gaming business during her first 100 days in charge, warning employees that a “hardware component crisis” could create further challenges ahead.
While Microsoft’s gaming division generated enthusiasm following the Xbox Games Showcase 2026 event, the positive momentum was quickly overshadowed by concerns surrounding declining subscriber numbers and the platform’s evolving identity.
Reports suggesting Xbox lost millions of Xbox Game Pass subscribers after a price increase last October intensified debate about whether the brand’s current strategy remains viable.
Nadella argued that although gaming remains one of the world’s most popular entertainment mediums, Microsoft has struggled to fully capitalise on its success.
He said: “Still, the challenge we have is we’ve not been monetizing that entertainment.
“In fact, if anything, we’ve been subsidising that entertainment.”
He also pointed to the growing influence of content creators and video platforms within the gaming ecosystem.
Nadella added: “There’s more monetisation of Xbox games happening on YouTube than at Microsoft.
“So, that doesn’t mean we go do things that are unnatural.
“We want us to do what is really our job, which is to build great games, build great hardware, but we’ve got to do it in an economically sustainable way.”
The remarks underline Microsoft’s efforts to balance creativity and profitability as Xbox searches for a model capable of supporting blockbuster game development, subscription services and future hardware innovation in an increasingly competitive market.
Microsoft CEO determined to make Xbox ‘a sustainable business’
