Microsoft CEO Satya Nadella has once again indicated that the next generation Xbox console will effectively operate as a PC.
A recent report suggests that the upcoming Xbox will be a console-PC hybrid, capable of playing PC titles, including those from PlayStation released on platforms like Steam. This revolutionary move could allow players to enjoy games like God of War, Spider-Man, and Ghost of Tsushima directly on their next-gen Xbox, a significant first for the industry.
According to Windows Central, the next-gen Xbox will offer users the flexibility to operate within the familiar Xbox environment or switch to a full Windows PC mode. This Windows functionality would grant access to a vast library of PC games, including PlayStation titles on Steam, as well as mouse and keyboard compatible games from launchers like Battle.net (for World of Warcraft) and Riot’s platform (for League of Legends).
An image illustrating Microsoft CEO Satya Nadella, who has hinted strongly at the future of Xbox.
In a recent interview with TBPN, Microsoft CEO Satya Nadella offered compelling insights into the direction of the company’s gaming strategy, providing a strong indication of their future plans.
(Notably, during the interview, Nadella was not questioned about the controversial Trump Master Chief AI image or the Department of Homeland Security’s use of a Halo image to promote ICE.)
Microsoft CEO Satya Nadella articulated his vision for the company’s gaming future, stating:
“Remember, the biggest gaming business is the Windows business. 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.”
A tweet from TBPN on October 29, 2025, summarized their interview with Satya Nadella, covering the Microsoft-OpenAI partnership, Nadella’s views on AGI, Microsoft’s role in the AI ecosystem, adaptation to the AI paradigm shift, Microsoft’s gaming business, and more.
These statements from Nadella align with earlier reports and insights from other Xbox executives. Xbox president Sarah Bond, for instance, has previously highlighted premium handheld devices like the ASUS ROG Xbox Ally X as indicative of the direction Microsoft is pursuing for its next console. In a Mashable interview, Bond cryptically hinted at Microsoft’s ambitions, strongly suggesting that the new device would be a high-end and costly offering.
Bond articulated, “The next-gen console is going to be a very premium, very high-end curated experience. 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 recently reaffirmed its commitment to launching a next-gen console to succeed the Xbox Series X and S, and has secured a partnership with AMD for its development.
Microsoft assures consumers of “next-level performance, cutting-edge graphics, breakthrough gameplay, and unmatched compatibility,” confirming that all new developments will maintain full compatibility with existing Xbox game libraries.
Xbox’s Gaming Empire: Franchises Owned After Activision Blizzard Acquisition
An interactive slideshow showcases the extensive roster of video game franchises now under Xbox’s ownership following the Activision Blizzard acquisition. This includes iconic titles like Call of Duty, Diablo, Halo, World of Warcraft, and The Elder Scrolls, highlighting Microsoft’s growing presence in the gaming industry.
Bond further elaborated on the console-PC hybrid concept, 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 you an Xbox experience not locked to a single store or tied to one device.”
She added, “That’s why we’re working closely with the Windows team, to ensure that Windows is the number one platform for gaming.”
Nadella also discussed Microsoft’s gaming business model, emphasizing that robust profit margins are essential for funding innovation within the company.
He stressed, “But most importantly, the game business model has to be… where we have to invent maybe some new interactive media as well. 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.”
A placeholder for a video, potentially related to Halo: Campaign Evolved gameplay in 4K.
This emphasis on profit margins comes on the heels of recent reports claiming Microsoft has pressured its Xbox studios to achieve an ambitious 30% profit margin, significantly above the industry standard.
Jason Schreier of Bloomberg previously reported that Microsoft’s aggressive 30% profit margin target was a driving factor behind extensive layoffs, project cancellations, controversial price increases, and the company’s strategic shift toward multiplatform releases within its gaming division.
Xbox has experienced severe cutbacks, with thousands of employees laid off across multiple rounds. High-profile projects like Rare’s Everwild and The Initiative’s Perfect Dark reboot were canceled after extensive development. ZeniMax Online Studios’ Project Blackbird also met the same fate, resulting in significant job losses, and The Initiative itself was closed. Additionally, last year saw the closure of Arkane Austin, developer of Redfall, and Tango Gameworks, known for Hi-Fi Rush.
Concurrently, Microsoft has raised prices for both the Xbox Series X and S consoles, alongside a contentious increase of Xbox Game Pass Ultimate to $29.99 monthly. An attempt to raise video game prices to $80 was met with significant consumer backlash, leading to a temporary rollback to $70 for titles like Obsidian’s The Outer Worlds 2, though an $80 standard is widely anticipated for the coming year.
Bloomberg reports that while the industry average for video game profit margins is 17-22%, Xbox has typically ranged from 10-20% over the last six years. For perspective, Sony’s PlayStation achieved a 16% profit margin in Q1 FY25. This ambitious 30% target was reportedly mandated by Microsoft CFO Amy Hood in fall 2023, coinciding with the company’s $69 billion acquisition of Activision Blizzard.
Consequently, Bloomberg suggests that game development will likely prioritize titles with lower production costs or higher revenue potential, potentially sidelining more ambitious, riskier projects. Furthermore, Xbox’s hardware division, currently facing challenges, is reportedly due for a “significant rethinking.”
As Microsoft and Sony prepare to launch their next-gen consoles in 2027, Xbox appears to be diverging from traditional console design. In contrast, the PlayStation 6 is anticipated to remain a more conventional console, continuing to offer compelling exclusive titles, a strategy similar to the current PS5.
Microsoft has decisively moved away from game exclusivity, evidenced by the announcement of Halo: Campaign Evolved for PS5 in 2026. This decision follows Sarah Bond’s assertion that the concept of an exclusive title tied to a single storefront is “antiquated for most people,” making Halo’s move to its former rival less shocking.
Image credit: Stephen Brashear/Getty Images.
Authored by Wesley Yin-Poole, Director of News at IGN.