Microsoft CEO Satya Nadella has praised Xbox’s ongoing “streamlining” efforts, saying he feels “fantastic” about the company’s gaming portfolio despite the recent wave of layoffs and studio restructuring.

Nadella discussed the current state of Xbox during an interview with Alex Heath on the Sources podcast, shortly after Microsoft‘s latest restructuring resulted in hundreds of job losses and major changes across its first-party studios.

Xbox CEO Asha Sharma is overseeing the wider reset, which has included studio consolidations, cancellations and significant changes to franchises including Halo.

Nadella Praises Xbox’s Streamlining

Despite the scale of the restructuring, Nadella expressed confidence in Microsoft’s gaming business and particularly its collection of studios and intellectual property.

“I feel fantastic about the IP we have right now. If I look at the studios, the IP portfolio we have, and our ability to then take that and produce great games going forward, I feel fantastic.”

Nadella then specifically praised the restructuring being led by Sharma.

“There’s some amount of streamlining the team is doing, and Asha is doing, which is great to see.”

However, Nadella acknowledged that Microsoft still needs to establish the right sustainable business model for Xbox.

Nadella said Microsoft's goal is to remain both a major game publisher and platform provider across PC and Xbox while finding a sustainable model that can reach more players.

Nadella also reiterated Xbox leadership’s expectation that the gaming business will return to growth during Microsoft’s next fiscal year.

His comments arrive shortly after Microsoft cut another 268 Xbox positions as part of the 3,200 job reductions announced in July, while reorganizing several major studios under Activision and Bethesda.