Satya Nadella denies Xbox death rumors, insists Microsoft is "long on gaming"

[DragonSlayer101]

Something to look forward to: Microsoft CEO Satya Nadella has pushed back on rumors that the company plans to wind down its gaming business to focus on the more profitable worlds of AI and cloud services. During an internal Q&A, Nadella told employees that Microsoft is "long on gaming" and intends to increase its investment in the division in the years ahead.

Speaking with newly appointed Microsoft Gaming head Asha Sharma, Nadella dismissed speculation that the company might abandon gaming in favor of Windows, Azure, and AI. He described gaming as one of Microsoft's "main identities" over the past couple of decades and said it will remain a core part of the company's business portfolio going forward.

Nadella also emphasized gaming's influence across Microsoft's broader ecosystem, noting that it has acted as an accelerator for the company's cloud and personal computing businesses. At the same time, he acknowledged recent missteps that sparked backlash from gamers and said Microsoft will "always" continue investing in gaming in the foreseeable future.

Gamers went into panic mode last week after Seamus Blackley, co-creator of the original Xbox, claimed that Microsoft was "sunsetting" the Xbox brand as part of a broader plan to exit the segment within the next few years. The post fueled speculation about the end of Xbox consoles and sparked fears that major acquisitions such as Activision Blizzard could lose value.

Seamus' claim followed a series of leadership changes inside Microsoft's gaming division, including the departure of longtime gaming chief Phil Spencer and the unexpected resignation of Xbox president Sarah Bond. The decision to appoint AI executive Asha Sharma to lead the division also led some industry watchers to interpret the move as the beginning of the end for Microsoft's traditional gaming business.

Despite the speculation, Microsoft recently confirmed long-standing rumors that its next Xbox will be a hybrid between a console and a PC, capable of running both Xbox and Windows games. Last week, Sharma revealed that the upcoming system is codenamed "Project Helix" and will support titles from both ecosystems.

The hybrid console will reportedly be manufactured and marketed by traditional PC vendors such as Asus, which already sells the ROG Xbox Ally handheld. Rumors suggest the device will be powered by an AMD APU codenamed Magnus, combining 10 Zen 6 CPU cores with an RDNA 5 GPU.

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Satya Nadella denies Xbox death rumors, insists Microsoft is "long on gaming"

 

[NumberNine]

Microsoft will "always" continue investing in gaming in the foreseeable future.

That's a good one. I'm going to start using it.

 

[Hecate91]

I'll believe that when they turn Xbox around and actually compete with Sony.
I have no trust in Microslop when they've only committed to AI, while Windows has been AI slop and vibe coded into an awful bloated mess, Xbox has become irrelevant to the overall gaming market.

 

[Theinsanegamer]

Microsoft's efforts have not borne fruit. Sure the software division keep trucking, but the hardware division is floundering. With retailers pulling out that confidence is clearly limited to Redmond's offices.

 

[m4a4]

Microsoft's efforts have not borne fruit. Sure the software division keep trucking, but the hardware division is floundering. With retailers pulling out that confidence is clearly limited to Redmond's offices.

If the software side is doing well, why do they care about pushing the hardware side in this digital age..?

 

[Theinsanegamer]

If the software side is doing well, why do they care about pushing the hardware side in this digital age..?

Because the hardware division is not a charity. It needs to either stand up on its own or contribute significantly to other departments' success, neither of which it is doing right now. Xbox, as a brand, needs more then just Gamepass to survive. Gamepass growth has stalled. It's biggest proponents used it on console, and that market has totally stalled out now. If it has to just stand on PC with nothing else to back it up, the brand will fail.

 

[m4a4]

Because the hardware division is not a charity. It needs to either stand up on its own or contribute significantly to other departments' success, neither of which it is doing right now.

Yeah, it sounds like their next hardware launch will be a "premium" offering, where it won't be subsidized (a "charity"). And might just be 3rd party hardware licensing.
The hardware is no longer the focus, software is. The console wars are long over.

And besides, if the software is still going well despite the low hardware, why are people still making it out like Xbox lives or dies on hardware? The brand is the games, has been for a while (despite some recent flops).

 

[Theinsanegamer]

Yeah, it sounds like their next hardware launch will be a "premium" offering, where it won't be subsidized (a "charity"). And might just be 3rd party hardware licensing.
The hardware is no longer the focus, software is. The console wars are long over.

Well seeing as we cannot beam games right into our retinas, you still need hardware to play those games. And look at PS5 (90+ million) or Switch sales(155+ million) and tell me the "console wars are long over".

Consoles still sell very well, as does software for consoles. Microsoft has just totally fumbled their position.

And besides, if the software is still going well despite the low hardware, why are people still making it out like Xbox lives or dies on hardware? The brand is the games, has been for a while (despite some recent flops).

I already answered this in my previous comment.

Gamepass growth has stalled. It's biggest proponents used it on console, and that market has totally stalled out now. If it has to just stand on PC with nothing else to back it up, the brand will fail.

Gamepass cannot survive on PC alone. It's too expensive without a captive audience (xbox purchasers) to amortize the cost of running it. Without its Xbox hardware; Microsoft has no real brand recognition, xbox on PC has been an utter failure, as has the "everything is an xbox" marketing push.

Microsoft was peacocking about how Gamepass had $5 billion in revenue across both console and PC. Meanwhile, Playstation hit $17 billion just on its own console. Given the size of those relative markets, it seems pretty clear that Microsoft is missing out on a continuous gold mine it cant figure out how to exploit.

 

[p51d007]

LOL, they might treat X-Box like they did the Microsoft phone and just let it die. Then, in a few years complain about how they "missed the boat".

 

[Theinsanegamer]

LOL, they might treat X-Box like they did the Microsoft phone and just let it die. Then, in a few years complain about how they "missed the boat".

Or like their wireless display adapters. Those're SO much better then the alternatives and MS just ditched them. Absolute BS.

Or the surface go. Keep banging your head on poor battery life while ignoring ARM chips, while simultaneously dropping Windows RT because you cant figure out how to make it work.

 

[m4a4]

Well seeing as we cannot beam games right into our retinas, you still need hardware to play those games. And look at PS5 (90+ million) or Switch sales(155+ million) and tell me the "console wars are long over".

If only there were other platforms to play games on. And if only that were a viable strategy to a point where the Gaming Division revenue was doing well.
/sarcasm

Capcom would like a word about your shallow premise.

Gamepass cannot survive on PC alone. It's too expensive without a captive audience (xbox purchasers) to amortize the cost of running it. Without its Xbox hardware; Microsoft has no real brand recognition, xbox on PC has been an utter failure, as has the "everything is an xbox" marketing push.

Right, because 3rd party game publishers died years ago. And the ONLY software MS sells is GamePass.
/sarcasm

Microsoft was peacocking about how Gamepass had $5 billion in revenue across both console and PC. Meanwhile, Playstation hit $17 billion just on its own console. Given the size of those relative markets, it seems pretty clear that Microsoft is missing out on a continuous gold mine it cant figure out how to exploit.

Great! Cherry picked numbers. Now, compare MS and Sony gaming revenue, and their hardware projected sales and see how they don't correlate as nicely as you want them to.

Stop being disingenuous and actually be honest here. Your shallow premise's aren't worth more than sarcasm.

 

[ScottSoapbox]

Gaming and xbox are not the same thing.

Listen to what he says not to what he implies.

SEC rules require a certain amount of truthfulness but execs are allowed to be clever in their wording.

 

[adaplect]

But they gave up too easily on mobile (they shouldn't have, that was a HUGE mistake)

 

[TooQik]

..the company plans to wind down its gaming business to focus on the more profitable worlds of AI and cloud services.

Was this a direct quote from Nadella? If so, where exactly are they making money with AI?

 

[winjer]

I would not trust Miscroslop or XSlop to make a comeback.
It has been over 15 years since Xbox was actually doing good things.

 

[Anton Longshot]

Come on people give Nadella the respect he deserves.
He made Microsoft what it is today!

Fark I snotted my keyboard writing that hahaha

 

[FaTaL]

Xbox on PC failed because its bloated crap and game packages are reconfigured encrypted sht.. I.e. - you cannot use 3rd party software to configure peripherals for games (Logitech GHUB for mouse/keyboard).

 

[BobHome]

Okay, first the hybrid, then the death knell. "One OS (AI) to Rule Them All!"
How many companies have already tried that....

 

[spam joe]

Xbox has felt to me like it's been dying ever since the notorious Xbox One launch, where a bunch of old execs stood on the stage smarmily self-congratulating one another and talking about "the water cooler". This was when Microsoft *tried* to get away with no backward compatibility and users revolted (I wrote a paper at the time about how Microsoft's claims that backward compatibility "can't be done" was hogwash and the solution could be an in-memory resident VM instance with CPU emulation).

After this debacle, Microsoft decided to make Games with Gold suck more and more every month. The games got so bad, I dropped my subscription for the first time since Xbox Live Gold first became a thing. The new subscription model, whatever it's called, where you get to enjoy games as long as they're on the rotation, I have zero interest in that... I like to own my games and play them whenever I want.

Now, MS recently raised the prices of purchasing games. I used to be able to pricewatch / wishlist a game and it would drop to 9.99, but now the baseline for a good game seems to be 24.99. It's just code, why would they refuse to ever drop it below 20? Why are people paying this much for games in the first place?

All this and now the whole "Every device is an Xbox". No it isn't. An Xbox is a dedicated console where I don't need to worry about drivers or hardware components ever and it's always ready to play a game. This should be easy, but I feel like they've lost focus and are trying to do just too much and it's diluting the brand and the experience.

Yeah, they'll probably kill it and my decades of investment in a vast game library will be dead.

 

[LimyG]

Anything said by Sataya should be taken with a grain of salt.

That's if he actually said it. Could be his A.I. alter ego.

 

[acrossthestars]

Nadella also emphasized gaming's influence across Microsoft's broader ecosystem, noting that it has acted as an accelerator for the company's cloud and personal computing businesses.

Notice how he doesn't say they're long on "console" gaming, because they're not.

They're not interested in Xbox the brand; it wouldn't be in the sorry, dilapidated, rundown state that it is, if they were. They're interested in Xbox the cloud gateway. It's not about being "long on games", it's about using Xbox's brand recognition as a tool to drive people into their cloud and AI ecosystem, like a back alley dealer getting you addicted to their latest high. Xbox gaming is just the first "hit".

 

[LimyG]

Notice how he doesn't say they're long on "console" gaming, because they're not.

They're not interested in Xbox the brand; it wouldn't be in the sorry, dilapidated, rundown state that it is, if they were. They're interested in Xbox the cloud gateway. It's not about being "long on games", it's about using Xbox's brand recognition as a tool to drive people into their cloud and AI ecosystem, like a back alley dealer getting you addicted to their latest high. Xbox gaming is just the first "hit".

Yes. Sounds like you well aware of MS general strategy.

 

[Theinsanegamer]

The article you're commenting on, is about the next XBOX which will not compete with PlayStation.
The Steam box will not compete with playstation.
Steam Deck is not intended to compete with Nintendo switch.
Nintendo have left the the living room console market almost a decade ago and does not compete with PlayStation anymore.

Each of these vendors have found a very different approach to sells their devices.

Do you expect any company in the gaming market to copycat the PlayStation business model and to compete about the same customers?

The comment I'm replying to is what I am commenting on.



The idea that "hardware doesnt matter because software" doesnt really work when your competitors are making significant money from having markets on their hardware.

The Switch has a very strong presence in the living room, IDK what you are on about there.

Windows gaming work's very well for Microsoft for ages.
Selling Windows licenses to PC OEM works very very well for them too for ages.
Hence it makes sense for the Xbox division to outsource the low margin hardware business and to concentrate on the hardware specification and the high margin game publishing.

Microsoft have not "fumbled" their position. They are the largest publisher today with a 24 Billion business. The 33 Billion business run by Sony is largely inflated by low margin hardware sales whereas Microsoft runs a high margin publishing division.

Windows gaming sales have not made MS money, hence why they push Gamepass and Xbox so hard, and you immediately contradicted yourself with the sony VS microsoft financial figures.

Microsoft's own games on PC sell the majority of their copies through the likes of Steam, not their own store. The majority of their store buyers buy it there to get access to their cross platform licensing. Without Xbox hardware, this becomes meaningless, there is no reason to not buy it on Steam.

Microsoft has absolutely fumbled their position, going from equals to Sony to performing at Wii U level, reliant on third party marketplaces to sell and overpaying for has been publishers.

 

[acrossthestars]

Yes. Sounds like you well aware of MS general strategy.

Except what they're doing here is different. Usually, their "embrace, extend, extinguish" philosophy of market dominance only applies to external influences. They endorse a company or IP, bring it into their wheelhouse and then toss it aside like any old desecated husk when they are finished.

Xbox isn't an outside influence. They're not absorbing something they didn't already own. They made Xbox, just like they made Windows, and now, they're actively destroying both. In any other company, this would be considered brand suicide. But, this is Microsoft we're talking about. They're not some scrappy, VC-funded startup that just launched last year. They've got a storied history and at the very least, they've always been "corporate first". They've never been "customer last". It seems to me that they're cloud-first approach, where everything is a dumb client that interfaces wtih a supercomputer, like this is the 1980s and they just launched DOS, hinges on people simply deciding that they don't feel like "owning" computers anymore and simply want to rent space on Microsoft's servers forever.

That is seemingly the desired goal. Copilot would work best, if every computer was just a Microsoft Chromebook. But, that's also regress, a downgrade. It's like taking peoples' cars away, after building out nothing but roads and interstate highways for 50 years. Nadella doesn't understand the contradiction. He honestly seems to think his customer base finds "ownership" archaic, as if he's doing them a favor. "They're not losing technology, they're gaining AI assistants. All it requires is that people relinquish everything they have. Isn't that a small price to pay for 'the future of computing?'"

 

[GoldenGoat]

So is this xbox not going to be subsidized? Microsoft isn’t going to take a cut off every game sale?