Days after a Bloomberg report revealed Microsoft’s desire for unrealistic profit margins from its gaming division—partly driving layoffs and studio closures—CEO Satya Nadella reiterated during an interview the industry’s need for innovation. He stated:

“If we as an industry don’t continue to innovate how we produce, what we produce, how we think about distribution, the economic model—the best way to innovate is to have good margins, because that’s the way you can fund.”

Nadella emphasized the importance of profit margins, although his commentary lacked specific ideas on how to innovate in gaming beyond funding. He expressed that gaming’s competition lies not within the industry, but against short-form video content.

He also hinted at Microsoft’s new gaming strategy, saying:

“We’re going to be everywhere, on every platform.”

Overall, while Nadella’s confidence in the future of gaming is clear, it remains uncertain how Microsoft plans to define innovation in the gaming space.