Xbox may be drowning now but Satya Nadella expects growth moving forward

The last few years haven’t been good for Xbox, and that forced a major reset with the onboarding of new management, layoffs, studio restructuring, and other cost-cutting efforts. All these changes will naturally take some time to show results, but Microsoft’s top boss believes that’ll be next year.

Microsoft held its FY26 Q4 earnings call yesterday (July 29), where CEO Satya Nadella spoke about the overall business, including its unhealthy gaming division. Nadella believes that all the “necessary decisions” that have been made across the board are expected to bring back growth to the Xbox business in fiscal 2027.

When it comes to XBOX, we are making the necessary decisions required across our content portfolio, platform, and operations to reset the business for long-term growth. We have the best IP in the industry, and talented studios around the world, and believe we can bring these strengths together and expect to return the business to growth in fiscal 2027.

Seems like Microsoft is giving Xbox one year from now to show growth. As it stands now, Xbox content and services revenue decreased by 10% as per FY 26, operating expenses have increased in several departments, and a recent report suggested that Microsoft is losing up to $150 per Xbox Series console sold.

That’s even before the looming price hike, which might reduce sales even further. Notably, there was a short-lived uptick in June sales because of the impending hike, but it seems like the decline will continue. The recent outage and the ‘disc-less future’ discussions are not helping either.

Xbox is expected to unveil Project Helix by the end of next year but is seemingly struggling to keep its price down. That reveal, however, will be after FY 2027 ends, so Microsoft’s expectations for Xbox growth seem rather ambitious.