CEO Satya Nadella appears to be satisfied with the work of the new Xbox head, Asha Sharma. Following hundreds of layoffs, he says it’s “great” to see the Xbox team streamlining its operations.
Anyone who has been closely following developments over the past few months knows that Microsoft’s Xbox gaming division is currently undergoing major restructuring. After longtime CEO Phil Spencer failed to deliver a healthy profit margin with his expansion strategy, he was forced to step down in February 2026—since then, former AI chief Asha Sharma has been at the helm of Xbox.
And she is currently scaling back the gaming business significantly. Around 1,900 employees have already been laid off, several studios have been spun off from the Microsoft Group, and the teams at Arkane (Dishonored) and Ninja Theory (Hellblade) are facing closure. Given the large number of layoffs, it’s hard for an outsider to claim that everything is running smoothly at Microsoft.
The Microsoft CEO himself, however, apparently sees things differently. On the American business podcast *Sources*, Satya Nadella spoke about the state of the company’s in-house gaming division (via Kotaku). Given the many prestigious brands that Xbox owns, he feels “fantastic.” However, he is less happy about Xbox’s low profit margin.
Fantastic, Great, Sustainable
I think it’s great how many fantastic brands we currently own
, Nadella said verbatim. When I look at the studios and IPs we currently have in our portfolio and the great games we can make with them in the future, I feel truly fantastic.
Regarding the numerous layoffs at the company over the past few months, the Microsoft CEO shows little empathy. He says these are necessary to secure the brand’s future:
The team and Asha are currently implementing some optimization processes, which is great to see. Next, we need to develop a sustainable business model that enables us to bring games to more and more people. That has always been our goal: We want to be a great publisher and a great platform provider for games on both PCs and Xbox consoles.
So that’s our goal. And I believe Asha and her team have said that Xbox will see growth in the next fiscal year. That’s the plan they’re executing, and in doing so, they’re doing an excellent job of developing great games.
In summary: It’s okay for people at Xbox to lose their jobs as long as the brand grows and continues to generate profits. Another 1,600 layoffs are planned at Xbox by the end of the current fiscal year. We’ve embedded Nadella’s entire podcast appearance above.
When she took office, Xbox head Asha Sharma set the ambitious goal of turning Xbox into a company that entertains more than a billion people every day (via Kotaku).
Whether that can actually happen, however, is highly questionable. According to the latest user figures from 2025, Xbox reached about 500 million monthly users across all platforms. Xbox hasn’t released official sales figures for its consoles in about 10 years because they’re selling worse than Sony’s competition.
Well, trying to make more money and reach customers with fewer staff sounds ambitious. However, with Activision/Blizzard and Bethesda, Microsoft still has some strong assets in its portfolio, whose projects (Halo, Fallout, Elder Scrolls) could provide the company with much-needed financial momentum in the coming years. You can find more news about Microsoft and Xbox in the link box above.
