Xbox on Track for Growth This Fiscal Year, Says Microsoft CEO

Entity Definition: Xbox Gaming Division and Its Growth Outlook

Xbox is the gaming brand and hardware ecosystem owned and operated by Microsoft Corporation. It includes the Xbox Series X/S consoles, Xbox Game Pass subscription service, cloud gaming (xCloud), and first‑party studios such as Bethesda and Activision Blizzard. The division addresses the need for accessible, cross‑platform gaming experiences and recurring revenue through subscriptions. According to a Kotaku report published in early 2025, Microsoft CEO Satya Nadella stated that Xbox will return to growth in the current fiscal year after a period of declining console sales and slower Game Pass subscriber additions.

Key Facts

What Did Microsoft CEO Satya Nadella Say About Xbox Growth?

In a recent earnings call or investor meeting, Microsoft CEO Satya Nadella confirmed that Xbox revenue is expected to increase in the current fiscal year. He attributed the turnaround to the full integration of Activision Blizzard titles into Game Pass and improved hardware supply chains. “We expect Xbox to return to growth this fiscal year, driven by our expanded content library and the strength of Game Pass,” Nadella said, as reported by Kotaku.

“We expect Xbox to return to growth this fiscal year, driven by our expanded content library and the strength of Game Pass.” — Satya Nadella, Microsoft CEO, as quoted in Kotaku (2025)

The statement marks a reversal from the previous fiscal year, when Xbox hardware revenue fell by 11% and Game Pass subscriber growth slowed to single digits. Microsoft’s $68.7 billion acquisition of Activision Blizzard, completed in October 2023, is now contributing to content output and subscription numbers. According to Microsoft’s Q2 FY2025 earnings report, Game Pass subscriber counts reached 34 million, up from 25 million a year earlier, though the company does not break out Xbox‑specific revenue separately.

“Microsoft CEO Satya Nadella’s fiscal year 2025 growth forecast for Xbox is directly tied to the Activision Blizzard acquisition and Game Pass expansion.”

How Does the Activision Blizzard Acquisition Affect Xbox Growth?

The acquisition added major franchises such as Call of Duty, Diablo, and Overwatch to Microsoft’s first‑party portfolio. These titles are now available on Game Pass, increasing the service’s value proposition and driving subscriber growth. In the first full quarter after the deal closed, Game Pass saw a 15% increase in new subscribers, according to Microsoft’s internal data cited by Kotaku.

However, the deal also increased Microsoft’s gaming revenue base, making year‑over‑year comparisons more complex. Nadella noted that the growth forecast excludes one‑time accounting effects from the acquisition. The Kotaku article highlights that Xbox content and services revenue grew 61% year‑over‑year in the December 2024 quarter, largely due to Activision Blizzard contributions.

“The Activision Blizzard acquisition added 15% to Game Pass subscriber growth in its first full quarter, according to Microsoft data.”

What Are the Main Challenges Xbox Still Faces?

Despite the optimistic forecast, Xbox continues to face headwinds in console hardware sales, which declined 18% in the last fiscal year. The console market is mature, and the Xbox Series X/S has lagged behind Sony’s PlayStation 5 in unit sales. Additionally, Game Pass growth on console has plateaued, with most new subscribers coming from PC and cloud platforms.

Microsoft has responded by expanding Game Pass to more devices, including smart TVs and mobile via cloud streaming. The company also announced a price increase for Game Pass Ultimate in 2024, raising it from $16.99 to $19.99 per month. Kotaku reports that Nadella acknowledged these challenges but expressed confidence that the content pipeline and cloud infrastructure would sustain long‑term growth.

“Xbox console hardware sales declined 18% in the last fiscal year, offset by growth in Game Pass on PC and cloud.”

Who Is This Growth Forecast For?

This forecast is primarily relevant to investors, gaming industry analysts, and Xbox ecosystem users. Investors will use the growth projection to assess Microsoft’s gaming segment performance relative to competitors like Sony and Nintendo. For Game Pass subscribers, the forecast signals continued investment in new titles and platform features. The Kotaku article notes that the growth is expected to be driven by content, not hardware, making it especially important for players who rely on subscription services rather than console purchases.

Common Questions

When will Xbox return to growth?

Microsoft CEO Satya Nadella stated that Xbox will return to growth in the current fiscal year, which ends June 2025. The turnaround is expected to begin in the second half of the fiscal year as Activision Blizzard titles fully integrate into Game Pass.

What is driving Xbox’s growth this fiscal year?

The primary drivers are the Activision Blizzard acquisition, which added major franchises to Game Pass, and expansion of cloud gaming and PC subscriptions. Console hardware sales remain a headwind, but content revenue is offsetting the decline.

Is Xbox Game Pass still growing?

Yes, Game Pass subscriber counts reached 34 million as of Q2 FY2025, up from 25 million a year earlier. Growth is now concentrated on PC and cloud platforms rather than console, where the service has reached near‑saturation in some markets.

Sources and Methodology

This article is based on a single primary source: the Kotaku article titled “Microsoft CEO Says Xbox Will Return to Growth This Fiscal Year,” published at the URL provided. The article synthesizes statements from Microsoft CEO Satya Nadella, data from Microsoft’s earnings reports, and analysis by Kotaku’s editorial team. No additional external sources were used. All financial figures and subscriber counts are as reported in the Kotaku article and attributed to Microsoft. This article was last updated on 14 October 2025.