Back in 2021, Microsoft’s CEO, Satya Nadella, considered pulling the plug on its entire Xbox gaming division. The reason? The company was at a crossroads: invest big to stay competitive or step away from gaming altogether.
Microsoft chose to double down. Instead of walking away, they went all-in with massive acquisitions:
- Bethesda Studios (Elder Scrolls, Fallout) for $7 billion.
- Activision Blizzard (Call of Duty, World of Warcraft) for $75.4 billion—the largest gaming deal ever.
These moves were meant to supercharge Game Pass, Microsoft’s subscription service that lets users play hundreds of games for a flat fee, like Netflix but for gaming. The goal was clear: make gaming more accessible and future-proof Xbox.
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But here’s where things get tricky:
Gaming revenue didn’t grow as expected last year — 5.8% instead of the projected 11%. That shortfall, combined with broader economic challenges, has led to tough decisions. This week, Microsoft announced layoffs in multiple areas, including its gaming division.
So, what’s next?
Microsoft isn’t giving up on gaming. Far from it. Despite setbacks, the company is still pushing to lead the charge in cloud gaming (play anywhere, instantly) and creating innovative ways for gamers to connect and explore.
Gaming might not be the first thing that comes to mind when you think of Microsoft, but it’s a massive part of what they do. And whether you’re a gamer or not, their influence on the future of entertainment is undeniable.
