Microsoft has cut at least 3,468 roles from its Xbox division since July, and CEO Satya Nadella used an appearance on the Sources Podcast to frame the next phase as a need to "invent the right sustainable business model" for the business.

What did Nadella actually say?

Speaking on the podcast, Nadella endorsed the cost program that new Xbox chief Asha Sharma has run since taking the role. He called the "streamlining" — which has produced thousands of redundancies and several studio wind-downs — "great to see." He also repeated Sharma's target that Xbox will "return to growth" in fiscal year 2027/28.

"If I look at the studios, the IP portfolio we have, and our ability to then take that and produce great games going forward, I feel fantastic," Nadella said. "And then we have to invent the right sustainable business model that allows us to deliver gaming to more and more people."

He added: "That has always been the goal, which is that we want to be a great publisher and a great platform provider for games across both PCs and Xboxes. And so that is sort of our goal."

How many jobs have been cut?

• July 2025: Xbox announced 3,200 redundancies, roughly half enacted immediately, alongside the planned divestment of five studios.
• Late October: A further 268 roles were cut as Microsoft reshuffled its games division, moving the Halo, Rare and Age of Empires franchises under the Activision Publishing umbrella.
• Combined disclosed total: 3,468 positions. Microsoft has not published a consolidated Xbox headcount figure.

What studios remain in limbo?

Xbox chief content officer Matt Booty outlined the position on the company's Wire outlet this week. Ninja Theory, the studio behind Hellblade, now faces a proposed closure.

"Unfortunately, two separate agreements for Ninja Theory fell through," Booty wrote. "We will now begin consultation with employees on a proposed closure while continuing to explore other paths forward. Consultation with Arkane remains underway and is expected to continue through the end of the year."

Ninja Theory's collapse marks the first failed divestment in the July round. Microsoft has not named the parties that withdrew.

What does the "sustainable business model" actually mean?

Nadella did not define it. He framed the goal in platform terms — Xbox as publisher and platform holder across PC and console — rather than in product terms. That leaves several operational questions open:

• Whether Game Pass pricing, tier structure or content cadence will change.
• Whether multi-platform publishing on PS5 and Nintendo Switch 2 expands further.
• Whether advertising, mobile or cloud streaming become larger revenue lines.
• Whether the ratio of internal first-party studios to external partnerships continues to shrink.

Microsoft has not confirmed any of these directions on the record.

Does Nadella expect Xbox to grow next year?

Yes, on paper. Nadella said he expects Xbox to "return to growth" in fiscal year 2027/28, which begins July 2026, and credited Sharma's team for executing the plan. He did not specify which metric — Game Pass subscribers, full-game unit sales, Activision-era live-service bookings or platform revenue — would define that growth.

"And I think Asha and team have said that Xbox is going to get back to growth this next fiscal year, and that's the plan they're executing on," Nadella said. "And in that process, do a bang-up job of producing some great games."

What to watch next

Microsoft's Q1 FY27 earnings in late October should show whether the 3,468-job total has moved, and whether management attaches any concrete subscriber or revenue figure to the "return to growth" claim before fiscal 2027/28 begins.