Satya Nadella Almost Closed Microsoft’s Gaming Business In 2021, Before Entering The Acquisition Business

There’s an interesting new report about Microsoft and the path not taken.

As shared on the GamingLeaksAndRumours subreddit by user Careless_Main3, subscription outlet The Information has a report claiming Microsoft almost closed their gaming business in 2021.

Out of respect for The Information, we won’t be quoting their report directly. Instead, we’ll focus on some information that’s now being talked about in public and share our commentary. You can pay and read their report here if you are so inclined.

The Information claims that Microsoft CEO Satya Nadella was forced to make a decision in the middle of the pandemic regarding their gaming business. In 2021, the company was already pushing their Game Pass subscription business, but Satya was seriously considering closing their gaming business in general.

As we know, Nadella ultimately chose to keep their gaming business going, and apparently, that was because Nadella’s option two was to get into acquisitions to make their Game Pass business more viable. And this is why they spent big money, and even dealt with heavy regulation, in acquiring Bethesda and Activision Blizzard King. The Information’s report goes on to claim that the market does not seem to be taking to Game Pass, but this is where we’ll diverge to make our own points.

Microsoft made $ 2.9 billion in Game Pass on consoles in 2021, representing 18 % of the gaming business’ total revenue. The full business generated $ 16.3 billion for the year. Now, we have to clarify that Microsoft deliberately obfuscates some of this data from the public, but in general we can say that Microsoft’s game business was profitable in 2021.

At the time, Microsoft was clearly benefiting from the lockdown phase of the pandemic itself. In 2022, revenue dropped slightly to $ 15.563 billion, and then jumped to $ 18.128 billion in 2023. We will have to wait until March to get Microsoft’s report card for 2024.

The 2023 jump was clearly because Microsoft managed to close the Activision deal, but even then, it also happened in the last minute. So there’s potential that Microsoft saw an even bigger jump in revenue in 2024 that they just haven’t made public.

Microsoft did loudly declare that Call of Duty: Black Ops 6’s launch was a resounding success, bolstered by Game Pass. So now the question arises: Is Microsoft now doing better than what The Information is reporting? Because they may have access to older financial reports, even the latest ones they can get their hands on, but they also don’t know the full picture for that launch yet.

And this should go without saying, but if Microsoft did leave consoles at that point, it would not have been a success for Sony. It would have been a disaster for the industry, with millions of jobs immediately on the line.

And we want the console warriors reading this to take this situation seriously. Last year, Sony laid off 900 across their studios, including at Insomniac, their most consistent studio for this generation. If this report raises fears that Microsoft may eventually bow out of gaming, Sony may also take it as a sign for them to exit the business.

And no, Nintendo’s potential monopoly would not be the worst part of that potential outcome. But we should acknowledge that both PlayStation and Xbox have their struggles in this live service era, and we do want to see them keep going for the gaming business to stay healthy overall.