Microsoft CEO Satya Nadella has dropped yet another hint that the next-generation Xbox is essentially a PC. This shift means that popular titles like Sony Santa Monica’s *God of War*, Insomniac’s *Spider-Man*, Sucker Punch’s *Ghost of Tsushima*, and virtually all other PC games will be playable on the upcoming Xbox—a move that would mark an industry first.
According to Windows Central, users of the next-gen Xbox can choose to stay within the Xbox ecosystem or switch over to Windows, where the console functions like a traditional Windows PC. This would provide access to PlayStation games on Steam, as well as mouse-and-keyboard games from Blizzard’s Battle.net launcher (such as *World of Warcraft*) and Riot’s launcher (including *League of Legends*).
In a recent interview with TBPN, Satya Nadella addressed questions about the evolution of Microsoft’s gaming business and dropped a clear hint about the company’s future direction. (It’s worth noting Nadella was not asked about the recent Trump Master Chief AI image or the Department of Homeland Security’s ICE-promoting *Halo* image during this conversation.)
“Remember, the biggest gaming business is the Windows business,” Nadella began. “To us, gaming on Windows—and, of course, Steam has built a massive marketplace on top of it—they’ve done a very successful job. Now, we’re the largest publisher after the Activision [deal]. Therefore, we want to be a fantastic publisher. It’s a similar approach to what we did with Office. We want to be everywhere, on every platform. So, whether it’s consoles, PC, mobile, cloud gaming, or the TV, we want to make sure games are being enjoyed by gamers everywhere.”
He continued, “Second, we also wanted to do innovative work on the system side for both console and PC. It’s kind of funny that people think of consoles and PCs as two different things. We built the console because we wanted to build a better PC that could then perform for gaming. I kind of want to revisit some of that conventional wisdom.”
“But at the end of the day, the console offers an experience that is unparalleled. It delivers performance that is unmatched, pushing the system forward. So, I’m really looking forward to the next console and the next PC gaming experience.”
Nadella’s comments reinforce previous reports and statements from Xbox executives. For instance, Xbox President Sarah Bond pointed to the recently released and premium-priced ASUS ROG Xbox Ally X handheld as an indicator of Microsoft’s vision for the next-gen console.
In an interview with Mashable, Bond spoke somewhat vaguely about Microsoft’s aims but strongly suggested the upcoming console would be a high-end, expensive device. “The next-gen console is going to be a very premium, very high-end curated experience,” Bond said. “You’re starting to see some of the thinking we have in this handheld [ROG Xbox Ally], but I don’t want to give it all away.”
Microsoft confirmed as recently as earlier this month that plans continue for a follow-up to the Xbox Series X and S. The company has also announced a partnership with AMD to develop the new console, promising “next-level performance, cutting-edge graphics, breakthrough gameplay, and unmatched compatibility.” All new devices will reportedly be “fully compatible” with users’ existing Xbox game libraries.
Bond has previously backed the console/PC hybrid idea as well, stating, “This is all about building you a gaming platform that’s always with you, so you can play the games you want across devices anywhere you want, delivering an Xbox experience not locked to a single store or tied to one device. That’s why we’re working closely with the Windows team to ensure Windows is the number one platform for gaming.”
On the topic of Microsoft’s gaming business model, Nadella highlighted how sustainable innovation depends on good profit margins. “But most importantly, the game business model has to be… where we invent maybe some new interactive media as well,” he said. “After all, gaming’s competition is not other games; gaming’s competition is short-form video. So if we as an industry don’t continue to innovate how we produce, what we produce, and how we think about distribution and the economic model, the best way to innovate is to have good margins because that’s how you can fund future innovation.”
This mention of profit margins follows recent reports that Microsoft has pushed Xbox studios to achieve a 30% profit margin—significantly higher than the video game industry average. Bloomberg’s Jason Schreier reported that this 30% margin target has contributed to major layoffs, project cancellations, controversial price increases, and a broader multiplatform push within Xbox.
The cuts have been extensive. Thousands of Xbox employees lost their jobs in a series of layoffs. High-profile canceled projects include Rare’s *Everwild*, The Initiative’s *Perfect Dark* reboot, and ZeniMax Online Studios’ *Project Blackbird*, which led to mass layoffs and The Initiative’s eventual shutdown. Additionally, Microsoft closed Arkane Austin (developers of *Redfall*) and Tango Gameworks (developers of *Hi-Fi Rush*) last year.
Meanwhile, Microsoft has raised the prices of the Xbox Series X and S consoles and increased the Xbox Game Pass Ultimate subscription fee to $29.99 per month—a move that sparked controversy. Although Microsoft attempted to raise video game prices to $80, it reversed this decision following fan backlash over the higher cost of games like Obsidian’s *The Outer Worlds 2*. However, many expect Microsoft to push for $80 games in the coming year.
To put the 30% profit margin goal in context, Bloomberg noted the industry average sits between 17-22%, while Xbox’s margins ranged from 10-20% over the past six years. For comparison, Sony’s PlayStation division achieved a 16% profit margin in Q1 FY25. Bloomberg also reported that Microsoft CFO Amy Hood enforced the new 30% margin target in fall 2023, following Microsoft’s $69 billion acquisition of Activision Blizzard.
The implication is that games with lower development costs or higher expected revenue may be prioritized over riskier projects. Additionally, Xbox’s struggling hardware division might undergo significant restructuring.
Looking ahead, Xbox will compete with Sony’s next-generation console, with both expected to launch in 2027. While Microsoft is taking a different approach with the Xbox, it’s anticipated that Sony’s PlayStation 6 will follow a more traditional console model, emphasizing genuinely exclusive games as the PS5 does today.
Speaking of exclusives, Microsoft appears to have largely abandoned the concept. The company announced that *Halo: Campaign Evolved* will release on PS5 in 2026. Bond had previously described the idea of games being exclusive to a single storefront as “antiquated for most people,” so the *Halo* series arriving on what was once considered Xbox’s fiercest rival comes as little surprise.
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*Wesley Yin-Poole*
Director of News, IGN
Find him on Twitter: [@wyp100](https://twitter.com/wyp100)
Reach Wesley at [email protected] or confidentially at [email protected]
https://www.ign.com/articles/its-funny-that-people-think-about-the-console-pc-as-two-different-things-microsoft-ceo-satya-nadella-drops-biggest-hint-yet-that-the-next-xbox-is-basically-a-pc
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