Microsoft CEO Satya Nadella has once again hinted that the next-gen Xbox is essentially a PC.
A new report this week claims The next Xbox is a console/PC hybrid that will be able to play PlayStation games released on PC via Steam.. This means that games like Sony Santa Monica's God of War, Insomniac's Spider-Man, Sucker Punch's Ghost of Tsushima and almost every other PC game will be available on the next-gen Xbox for an industry first.
Windows Center reported that while next-gen Xbox users can remain in the Xbox ecosystem if they choose, they can move to Windows, where the console acts like a traditional Windows PC. This means having access to PlayStation games on Steam, as well as mouse and keyboard games from the Blizzard launcher, Battle.net (World of Warcraft), and Riot launcher (League of Legends).
Now in an interview with the magazine TBPNMicrosoft CEO Satya Nadella answered questions about the evolution of the company's gaming business and thereby gave a clear hint about the direction in which the company is moving.
(Nadella was not asked about Trump's recent Master Chief AI image or Department of Homeland Security's Halo image promoting ICE in an interview.)
“Remember, the biggest gaming business is the Windows business,” Nadella began. “For us, Windows games… and of course Steam has built a huge market around them and they've done a very successful job. We're now the biggest publisher after Activision. [deal]. That's why we want to be a fantastic publisher. The approach is similar to what we did with Office. We want to be everywhere, on every platform. So we want to make sure, whether it's consoles, PC, mobile, cloud gaming or TV, we just want to make sure that games are enjoyed by gamers everywhere.
“Secondly, we also wanted to do innovative work on the system side of console and PC. It's funny how people think of console and PC as two different things. We built console because we wanted to build a better PC that could then work for gaming. I kind of want to go back to some of those conventional wisdoms.
“But at the end of the day, the console provides an unprecedented experience. It delivers unprecedented performance, which I think pushes the system forward. So I'm really looking forward to the next console, the next PC games.”
Tuesday's Diet TBPN: our interview with @satyanadella in less than 15 minutes.
The Microsoft-OpenAI partnership, Satya's take on 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 here shouldn't come as much of a surprise, as they back up previous reports and comments from Xbox executives. For example, Xbox President Sarah Bond cited the recently released and expensive ASUS ROG Xbox Ally X portables as pointers to the direction Microsoft is heading with its upcoming console. In an interview with MashableBond was vague about what Microsoft was going to achieve. but strongly suggested that it would be an expensive device.
“The next generation console will be very premium and high-end, carefully designed,” Bond said. “You start to understand what we have in this portable device. [ROG Xbox Ally]but I don’t want to give it all away.”
The company confirmed – just recently, earlier this month — that it still plans to follow the lead of the Xbox Series X and S with a next-gen console and has announced an agreement with AMD to make this happen.
Microsoft promised “next-level performance, cutting-edge graphics, revolutionary gameplay and unparalleled compatibility” and said that everything it works on will be “fully compatible” with Xbox users' existing game library.
Bond's previous comments also supported the console/PC hybrid proposal. “It's about creating a gaming platform that's always with you, so you can play the games you want on different devices, wherever you want, giving you an Xbox experience that's not tied to one store or tied to one device,” Bond said.
“That's why we're working closely with the Windows team to ensure Windows becomes the number one platform for gaming.”
Nadella later touched on Microsoft's gaming business model, saying the best way to innovate is to have good profits, as that means the company can finance those innovations.
“But the most important thing is that the gaming business model must be… we may have to invent some new interactive media,” Nadella said. “At the end of the day, the competition of games is not other games. The competition of games is short videos. And so unless we as an industry continue to innovate – how we manufacture, what we produce, how we think about distribution – the economic model, the best way to innovate is to have good margins, because that's how you can finance.”
Mention of fields follows a recent report claiming that Microsoft has forced Xbox studios to provide 30% of profits. – much higher than the industry average.
Bloomberg's Jason Schreier reports. that Microsoft's 30% profit target led to huge layoffs in its gaming division, project cancellations, controversial price increases, and multi-platform development.
Xbox cuts were deep. Thousands of employees lost their jobs in multiple rounds of layoffs. Games like Rare World of Everwild And Relaunch of Perfect Dark Initiatives were canceled after many years of development. Game ZeniMax Online Studios Project Blackbird was mothballedwhich led to mass layoffs. The initiative was also closed. Last year, Microsoft shuttered Redfall developer Arkane Austin and Hi-Fi developer Tango Gameworks.
Meanwhile, Microsoft increased the price of the Xbox Series X and S consoles, as well as the price of Xbox Game Pass Ultimate to $29.99 per month – the latter of which was an extremely controversial move. Microsoft tried to move to $80 video games but ended up reverting to $70 after fans balked at the idea of paying $10 more for Obsidian's The Outer Worlds 2. Most expect Microsoft to move to $80 at some point in the next year.
Bloomberg said that the average profit margin in the video game industry is 17-22%. Over the past six years, Xbox's share has reached 10-20%. To put this 30% target into more context, Sony's PlayStation division achieved a profit margin of 16% in the first quarter of FY25. Bloomberg reported that Microsoft Chief Financial Officer Amy Hood set a new goal of fall 2023, amid Microsoft's $69 billion acquisition of Call of Duty maker Activision Blizzard.
Now, according to Bloombergthat games that are cheap to produce or that are more likely to make a lot of money may be prioritized over riskier projects. Meanwhile, the floundering Xbox hardware division could face a “significant rethink.”
Xbox is set to compete with PlayStation again, with Microsoft and Sony reportedly set to release their next-gen consoles in 2027. The next-gen Xbox will go in a different direction this time, but the PS6 is expected to be a more traditional console that offers truly exclusive games – much like the PS5 does now.
Speaking of exclusives, Microsoft really abandoned the whole concept after announcing Halo: Campaign Evolved for PS5 in 2026. Bond said the idea of an exclusive video game tied to one store had become “obsolete for most people.” so Halo's move to what was once considered its arch-rival isn't that much of a surprise either.
Photo by Stephen Brashear/Getty Images.
Wesley is IGN's News Director. Find him on Twitter at @wyp100. You can contact Wesley at [email protected] or confidentially at [email protected].
