Microsoft chief executive Satya Nadella has called the wave of Xbox job cuts “great to see”, the first time the company’s top executive has commented directly on a restructuring that has cost thousands of jobs and folded or closed half a dozen studios in under a year.
Speaking on the Sources Podcast with Alex Heath, Nadella said he feels “fantastic” about the IP Xbox has left and its ability to “produce great games going forward”. Asked directly about the layoffs, he credited the work to Xbox CEO Asha Sharma rather than describing a strategy of his own: “There’s some amount of streamlining the team is doing, and Asha is doing, which is great to see,” he said, before turning the conversation toward Xbox’s future business model.
What the Xbox job cuts actually removed
Xbox laid off 268 people this week, on top of roughly 1,600 jobs cut earlier in the year. The reset has folded Obsidian into Bethesda, handed the Halo franchise to Activision, and closed Double Fine, Compulsion Games and State of Decay developer Undead Labs. Hellblade studio Ninja Theory is expected to close next. Xbox set out the plan in a post titled Continuing our reset, published on 22 September.
Each of those moves removes a layer of first-party management rather than a piece of intellectual property outright: Halo still gets made, just by a different publisher’s team; Obsidian’s games still ship, just under Bethesda’s structure. That is the streamlining Nadella is describing, fewer standalone studios reporting up the chain, not fewer games in principle. We covered the cuts as they landed in our report on Halo’s move to Activision and the 268 roles cut alongside it.
What has changed since Project Helix
Sharma has been the public face of the reset, defending it with lines like “great technology gets better when it gets simpler, not bigger”, as PC Gamer reported. That framing marks a shift from where she stood a month earlier. In our piece on Project Helix as a ‘family of devices’, published 30 August, Sharma was talking about expanding Xbox’s hardware lineup, not shrinking its studio roster. Since then the public message has moved from expansion to contraction, and it is now Nadella, not Sharma, doing the reassuring about what Xbox has left.
That a chief executive one level above Sharma felt the need to step in and vouch for Xbox’s IP portfolio suggests the layoffs alone were not landing as confidence-building for players or staff.
The business model Nadella is chasing
Nadella framed the cuts as groundwork for something else: “Then we have to invent the right sustainable business model that allows us to deliver gaming to more and more people. That has always been the goal, which is, we want to be a great publisher and a great platform provider to games across both PC and Xboxes.” He did not specify what that model looks like beyond publisher and platform, the framing Microsoft has used since it began putting first-party games on PlayStation and Steam on day one.
What is new is that the sustainable version of that strategy apparently needs fewer studios than the one it is replacing.
What to watch next
Ninja Theory’s closure has not been finalised. Whether Nadella’s confidence in Xbox’s “IP portfolio” extends to keeping it open, or whether it becomes the next name on the list, is the next marker of whether the reset is actually done.
