Microsoft CEO Satya Nadella has given another hint that the next-gen Xbox console is essentially a desktop computer.
A fresh report this week claimed that the next Xbox will be a console-PC hybrid that will be able to play PlayStation games released on PC via Steam. This means that for the first time in the industry, the next-gen Xbox console will be able to play games such as Sony Santa Monica’s God of War, Insomniac’s Spider-Man and Sucker Punch’s Ghost of Tsushima, as well as almost all other PC games.
Windows HQ reported that while next-gen Xbox users can stay in the Xbox ecosystem if they want, they can exit to Windows, where the console works like a conventional Windows PC. This means access to PlayStation games on Steam and mouse and keyboard games from the Blizzard launcher, Battle.net (World of Warcraft) and the Riot launcher (League of Legends).
Now in an interview for TBPNMicrosoft CEO Satya Nadella answered questions about the evolution of the company’s gaming industry, giving a clear indication of where the company is headed.
(In the interview, Nadella was not asked about Trump’s recent Master Chief AI image or the Department of Homeland Security’s pro-ICE Halo image.)
“Secondly, we also wanted to do innovative work on the system side on the console and on the PC. It’s kind of funny that people think of console-PC as two different things. We built the console because we wanted to build a better PC that could then run games. I kind of want to revisit these conventional wisdoms.”
“But at the end of the day, the console provides an unparalleled experience. It provides unparalleled performance, which I think pushes the system forward. So I’m really looking forward to the next console, the next PC game.”
TBPN Tuesday Diet: our interview with @satyanadella in less than 15 minutes.
The Microsoft-OpenAI partnership, how Satya thinks about AGI, Microsoft’s role in the AI ecosystem, adapting to the AI paradigm shift, Microsoft’s gaming business and more. pic.twitter.com/qXZIlT1pW0
— TBPN (@tbpn) October 29, 2025
Nadella’s comments shouldn’t come as a huge surprise, considering they confirm previous reports and comments from Xbox executives. Xbox CEO Sarah Bond, for example, hailed the recently released — and exorbitant — ASUS ROG Xbox Ally X handheld as indicative of the direction Microsoft is heading with its upcoming console. In an interview with Possibility of mashingBond was vague about Microsoft’s intentions but strongly suggested that it would be an exorbitant device.
The company confirmed – quite recently, at the beginning of this month — that it still plans to follow the Xbox Series X and S with a next-gen console, and has announced a deal with AMD to make that happen.
Microsoft promised “higher levels of performance, cutting-edge graphics, groundbreaking gameplay and unmatched compatibility” and said everything it is working on will be “fully compatible” with users’ existing Xbox game library.
Bond’s previous comments also supported the suggestion of a console/PC hybrid. “The idea is to build you a gaming platform that will always be with you, so you can play the games you want on a variety of devices wherever you want, giving you an Xbox experience that is not limited to one store or tied to one device,” Bond said.
“That’s why we’re working closely with the Windows team to make sure Windows becomes the number one gaming platform.”
Nadella later addressed Microsoft’s gaming business model, saying that the best way to innovate is with good margins because it means the company can finance that innovation.
“But most importantly, the gaming business model must… assume that we will also have to invent maybe new interactive media,” Nadella said. “At the end of the day, competition in the gaming industry is not a different game. Competition in the gaming industry is short films. So if we as an industry don’t continue to innovate – both in how we produce, what we produce, and how we think about distribution – the economic model, the best way to innovate is to maintain good margins, because that’s how you can finance.”
The mention of margins follows a recent report that found that Microsoft was pushing Xbox studios to provide a 30% profit margin – much higher than the industry average.
This was reported by Jason Schreier from Bloomberg that Microsoft’s 30% profit margin target has led to massive layoffs in its gaming division, project cancellations, controversial price increases, and a push for cross-platform.
Xbox cuts were profound. Thousands of workers lost their jobs in several rounds of layoffs. Games like Rare to Everwild AND Reboot The Initiative Perfect Dark were canceled after years of development. ZeniMax Online Studios game Project Blackbird was left in the canwhich will lead to mass layoffs. The initiative was also closed. Last year, Microsoft shut down Redfall developer Arkane Austin and Hi-Fi developer Tango Gameworks.
Meanwhile, Microsoft has raised the price of Xbox Series X and S consoles and the price of Xbox Game Pass Ultimate to $29.99 per month – the latter of which was an extremely controversial move. Microsoft tried to jump to $80 for video games, but ultimately returned to $70 when fans rejected the idea of paying $10 more for Obsidian’s The Outer Worlds 2. Most expect Microsoft to jump to $80 at some point next year.
Bloomberg said the average profit margin in the video game industry is 17-22%. Over the last six years, Xbox has achieved 10-20%. To put that 30% target into better context, Sony’s PlayStation division achieved a 16% profit margin in the first quarter of FY25. Bloomberg said Microsoft CFO Amy Hood enforced the fresh target in fall 2023 – in conjunction with Microsoft’s $69 billion acquisition of Call of Duty maker Activision Blizzard.
Currently the result is according to Bloombergthat games that are inexpensive to produce or have a greater likelihood of making a lot of money may be prioritized over riskier projects. Meanwhile, Xbox’s “shaky” hardware division could face a “significant rethink.”
Xbox will once again take on PlayStation, with reports that both Microsoft and Sony will release their next-gen consoles in 2027. The next-gen Xbox is taking a different route this time around, but the PS6 is expected to be a more conventional console, offering truly exclusive games – just like the PS5 does now.
Speaking of exclusives, Microsoft rightfully moved away from the whole concept after announcing Halo: Campaign Evolved for PS5 in 2026. Bond said the idea of having a video game exclusive to one store has become “obsolete for most people.” so Halo’s leap to what was once considered its fiercest rival wasn’t much of a surprise either.
Photo: Stephen Brashear/Getty Images.
Wesley is the news director at IGN. Find him on Twitter at @wyp100. Wesley can be reached at wesley_yinpoole@ign.com or confidentially at wyp100@proton.me.
