Microsoft CEO Satya Nadella has dropped yet another hint that the next-gen Xbox is basically a PC.
A new report this week claimed the next Xbox is a console / PC hybrid that will play PlayStation games released on PC via Steam. That means the likes of Sony Santa Monica’s God of War, Insomniac’s Spider-Man, and Sucker Punch’s Ghost of Tsushima and pretty much all other PC games will all be playable on the next-gen Xbox in an industry first.
Windows Central reported that while users of the next-gen Xbox can remain inside the Xbox ecosystem if they want, they can exit to Windows, where the console acts like a traditional Windows PC. That means having access to PlayStation games on Steam, and mouse and keyboard games from Blizzard's launcher, Battle.net (World of Warcraft), and Riot's launcher (League of Legends).
Now, in an interview with TBPN, Microsoft boss Satya Nadella responded to questions about the evolution of the company’s gaming business, and in doing so dropped a clear hint at where the company is going.
(Nadella was not asked about the recent Trump Master Chief AI image or the Department of Homeland Security's ICE-promoting Halo image in the interview.)
“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, and 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. Similar approach to what we did with Office. We want to be everywhere, in every platform. So we want to make sure, whether it’s consoles, whether it’s the PC, whether it’s mobile, whether it’s cloud gaming, or the TV, we just want to make sure the games are being enjoyed by gamers everywhere.
“Second, we also wanted to do innovative work in the system side on the console and on the PC. It’s kind of funny that people think about the console-PC as two different things. We built the console because we wanted to build a better PC which could then perform for gaming. I kind of want to revisit some of that conventional wisdom.
“But at the end of the day, console has an experience that is unparalleled. It delivers performance that is unparalleled, that pushes I think the system forward. So I’m really looking forward to the next console, the next PC gaming.”
Tuesday's Diet TBPN: our interview with @satyanadella in under 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 here shouldn’t really come as much of a surprise, given they reinforce previous reports and comments from Xbox executives. For example, Xbox president Sarah Bond has called out the recently released — and pricy — ASUS ROG Xbox Ally X handhelds as pointing in the direction Microsoft is taking with its upcoming console. In an interview with Mashable, Bond talked in vague terms about what Microsoft is going for, but did strongly suggest it will be an 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."
The company has confirmed — as recently as earlier this month — that it still plans to follow the Xbox Series X and S with a next-gen console, and has announced an agreement with AMD to make it happen.
Microsoft has promised “next-level performance, cutting-edge graphics, breakthrough gameplay, and unmatched compatibility,” and said everything it’s working on will be “fully compatible” with users’ existing Xbox game library.
Prior comments from Bond have backed the console / PC hybrid suggestion up, too. "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 you an Xbox experience not locked to a single store or tied to one device," Bond said.
"That's why we're working closely with the Windows team, to ensure that Windows is the number one platform for gaming."
Nadella later went on to touch on Microsoft’s gaming business model, saying the best way to innovate is to have good margins, because that means the company can fund that innovation.
“But most importantly, the game business model has to be… where we have to invent maybe some new interactive media as well,” Nadella said. “After all, gaming’s competition is not other gaming. Gaming’s competition is short form video. And so if we as an industry don’t continue to innovate — both how we produce, what we produce, how we think about distribution — the economic model, the best way to innovate is to have good margins, because that’s the way you can fund.”
The mention of margins follows a recent report that alleged that Microsoft had pushed Xbox studios to deliver a 30% profit margin — much higher than the industry average.
Bloomberg’s Jason Schreier reported that Microsoft’s 30% profit margin goal had led to the gaming division’s huge layoffs, canceled projects, controversial price rises, and multiplatform push.
The cuts to Xbox have been deep. Thousands of staff have lost their jobs over several rounds of layoffs. Games such as Rare’s Everwild and The Initiative’s Perfect Dark reboot were canceled after years of development. ZeniMax Online Studios game Project Blackbird was canned, leading to mass layoffs. The Initiative was also shut down. Last year, Microsoft closed Redfall developer Arkane Austin and Hi-Fi rush developer Tango Gameworks.
Meanwhile, Microsoft has increased the price of the Xbox Series X and S consoles, and the price of Xbox Game Pass Ultimate to $29.99 a month — the latter of which was a hugely controversial move. Microsoft tried to make the jump to $80 video games, but ended up reverting to $70 after fans pushed back on the idea of paying $10 more for Obsidian’s The Outer Worlds 2. Most expect Microsoft to go to $80 at some point next year.
Bloomberg said the average profit margin in the video game industry is 17-22%. Over the past six years, Xbox has hit 10-20%. To put that 30% target into more context, Sony's PlayStation division achieved a 16% profit margin in Q1 FY25. Bloomberg said Microsoft Chief Financial Officer Amy Hood enforced the new target in fall 2023 — amid Microsoft’s $69 billion acquisition of Call of Duty maker Activision Blizzard.
The upshot now is, according to Bloomberg, that games that are cheap to make or considered more likely to make lots of money may take priority over riskier projects. Xbox’s “floundering” hardware division, meanwhile, may face “a significant rethinking.”
Xbox is set to go up against PlayStation once again, with both Microsoft and Sony reportedly set to release their next-gen consoles in 2027. The next-gen Xbox is taking a different route this time, but the expectation is the PS6 will be a more traditional console, offering genuinely exclusive games — as the PS5 does now.
Speaking of exclusives, Microsoft has well and truly walked away from the entire concept after announcing Halo: Campaign Evolved for PS5 in 2026. Bond had said the idea of a video game exclusive locked to a single storefront has become “antiquated for most people,” so Halo’s jump to what was once considered its bitter rival didn't come as much of a surprise, either.
Photo by Stephen Brashear/Getty Images.
Wesley is Director, News at IGN. Find him on Twitter at @wyp100. You can reach Wesley at wesley_yinpoole@ign.com or confidentially at wyp100@proton.me.
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