Microsoft CEO Satya Nadella said he believes “there’s more monetization of Xbox games happening on YouTube” than at its own company, following Xbox boss Asha Sharma’s recent commitment to “reset” the gaming branch.

Nadella commented on the state of Xbox in 2026 during a recent conversation with Hard Fork. When asked about Sharma’s memo, which saw her outline a plan for the next 100 days amid a tumultuous time for the company, he said the current challenge will see the Xbox team trying to figure out how to “innovate both in hardware, as well as in the games, going forward in an economically viable way.”

“No one can accuse Microsoft of not having invested for the last 25 years,” Nadella added. “Now, we have to turn this into a sustainable business that delivers what is fundamentally one of the best sources of entertainment, still.”

It’s no secret that Xbox is going through a rough patch. While Microsoft’s gaming division gained a fair bit of momentum from the Xbox Games Showcase 2026 presentation last weekend, it was almost immediately put right back in the hot seat as fans grew increasingly confused by its exclusivity strategy. News that the company had lost millions of Game Pass subscribers following an October price hike, as well as questions of whether or not the brand was fixable, didn’t help its situation.

It all came to a head when Sharma posted her June 10 memo, saying that, although her first 100 days since taking over as Xbox CEO have been positive, rough waters driven by a “hardware component crisis” lie ahead. Now, as Xbox looks into new business models, Nadella has chimed in.

“Still, the challenge we have is we’ve not been monetizing that entertainment,” he said. “In fact, if anything, we’ve been subsidizing that entertainment.”