Satya Nadella Explains Why Microsoft is “Long on Gaming”

Microsoft CEO Satya Nadella recently commented on the company’s gaming business following the recent leadership change that led Asha Sharma to become the new CEO of Microsoft Gaming. Following her appointment, Sharma boldly pledged to the “return of Xbox,” but Microsoft obviously has a lot of work to do to redefine what “Xbox” even means as the brand will soon celebrate its 25th anniversary.

During an internal Q&A session last week, Nadella, who was seen wearing an Xbox hoodie, sat alongside Sharma to talk about why Microsoft is “long on gaming.” Windows Central published a recap of what Nadella said during the event, and the Microsoft CEO seemed enthusiastic about the future.

During the lengthy process that led Microsoft to spend $68 billion to acquire Activision Blizzard, a confident Nadella famously said “if this is about competition, let us have competition.” While the acquisition definitely helped to transform Microsoft into one of the biggest game publishers in the world, the Xbox hardware business has continued to suffer, to the point it’s worth asking if a “premium” next-gen Xbox can sell any better than Xbox Series X|S and Xbox One consoles.

Well, according to what Nadella said during that internal Q&A session, Nadella sees gaming as part of Microsoft’s identity:

“There are core identities in this company. I don’t think Microsoft will exist without these identities continuing to thrive. We’re a platform company, a developer company. Being a knowledge worker company, and gaming. These are the main identities of what Microsoft has always meant, and will always mean. Therefore, we need to take that — we don’t take it for granted. We need to renew it. I’m really thankful to Matt [Booty] and Phil [Spencer] and Sarah [Bond], and all of you who have built this franchise into its 25th year.”

Later on, Nadella added that he wanted Microsoft to be “best-in-class” in gaming software, which has “lots of creation risks.” It’s true that Microsoft acquired many studios over the years, but it failed to release the type of GOTY contender that Sony or Nintendo manage to consistently put out. Games like Halo Infinite or Starfield failed to generate a lot of momentum, and you could also argue that Activision has lost its way with the Call of Duty franchise, with Black Ops 7 being outsold by EA’s Battlefield 6 in 2025.

“Why do we love games?” Nadella asked. “They tell the stories, the mythologies that make us who we are. Getting down to that core, the craft that goes with it, this is the place where we have to get the cultural zeitgeist and then have it manifest in everything that we do. In the games, in the marketing approach, everything that we do in this brand represents that.”

The exec also acknowledged that Microsoft has a responsibility to nurture its gaming business, one of its main consumer-focused businesses, which “at its best lifts the entire company.” Regarding Xbox’s current customers, Nadella added that Microsoft will try hard to keep them in the Xbox ecosystem. “We have to really make sure, whether it’s console, whether it’s PC, whether it’s the lover of Forza, Halo, we really want to make sure they love us for what they expect us to do,” Nadella said.

While Nadella didn’t comment on Microsoft’s next-gen Xbox plans, the exec said that he was listening to the online discourse about Microsoft’s gaming strategy. “I know there’s a lot of feedback … believe me, I’m on Twitter too sometimes … but I really think it’s that passion, though, that they have. This is the base of folks who just want us to do a fantastic job, of really doing what we’re meant to do as team Xbox,” Nadella said.

While Nadella seems bullish about Microsoft’s gaming business, it will be up to Asha Sharma, the new CEO of Microsoft Gaming, to set the best strategy to make Xbox grow. The current strategy, of releasing Xbox games on as many platforms as possible, makes Xbox hardware almost irrelevant. However, Game Pass is core to the Xbox business, and Microsoft is probably right to plan another next-gen console if Sony and Nintendo aren’t going to accept the gaming subscription service on their platforms.