With over 9,000 people laid off, Xbox more expensive than ever, and several studios closed, Microsoft's pro-AI CEO says the "best way to innovate is to have good margins"

Microsoft CEO Satya Nadella has shared his views on the gaming landscape, saying that the best way to innovate is to achieve better margins.

Xbox has been on a generational run of vastly disliked decisions this year, giving that original Xbox One reveal a run for its money. From mass layoffs that resulted in the cancellation of multiple projects, like Everwild and the Perfect Dark reboot, to third-party games like Romero Games' new game. Xbox prices have also gone up twice in 2025 alone (not just for consumers either; dev kits have been bumped up too). This was then followed by a big rework for Xbox Game Pass, which was a solid enough cover for a massive price hike for the subscription.

Microsoft CEO Satya Nadella (who said the layoffs weren't a huge deal because "we're investing more") made an appearance on the online tech show TBPN (GameFile's Stephen Totilo transcribed the interview on BlueSky). During the interview, Nadella was asked about his views on gaming and trotted out what seems to be the new Microsoft catchphrase after giving up on exclusives: "Gaming's competition is short-form video."

Nadella urged innovation in the gaming space, saying that the "best way to innovate is to have good margins. Because that's the way you can fund." So now that Xbox is upping the price on almost every part of its business except the actual games (which it tried before running that back), presumably, we should expect massive innovation to start pouring out from the publisher. Given how much Nadella loves AI, though, you might worry what those "innovations" mean for the jobs of many.

Microsoft continues reading anything but the room with a full-page Xbox Game Pass advertisement on console startup a day after hiking prices by 50%.