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[Topher]

An annual revision to how Satya Nadella is paid makes growth in Xbox games and services (not hardware) more lucrative for him​

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CEOs of publicly traded companies usually receive most of their annual compensation through cash and stock that is tied to how the company performs in certain ways.

For example, the CEO of Exxon, who made $36.9 million last year, has some of his pay tied to the company’s “energy transition.”

The CEO of John Deere, who made $26.7 million last year, has some of his pay tied to the “operating return on sales.” It’s best not to sell all those trucks and tractors at a loss.

Executives at Meta are tasked with admittedly unmeasurable performance goals such as the the exhortation to “build awesome things” and “go out and tell our story.”

But some companies are more specific, including Microsoft, which announced revised performance criteria for their top executives yesterday in the company’s annual proxy filing to shareholders.

If you’re reading Game File (you are!), you might be interested in knowing that Xbox—specifically revenue from content and services; not hardware—is set to be a bigger part of senior Microsoft execs’ performance pay targets in 2025 than it has been in years.

Microsoft CEO's pay will be tied to Xbox more than ever in 2025

An annual revision to how Satya Nadella is paid makes growth in Xbox games and services (not hardware) more lucrative for him

www.gamefile.news

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Rest of article is paywalled, but more than likely referring to the increase in weight given to "Xbox Content and Services Revenue Growth" from 10% to 15%.

https://www.sec.gov/ix?doc=/Archives/edgar/data/789019/000119312524242883/d858775ddef14a.htm

 

[diffusionx]

Nadella in 2026:

 

[iamvin22]

Guess we know why MS wants to push content to all platforms now.

 

[Crayon]

They mean Activision.

 

[Heisenberg007]

• Satya Nadella removed Game Pass from his bonus criteria.
• Satya Nadella tied his bonus with Xbox "Content & Revenue."
• Satya Nadella put Xbox games on PlayStation and Nintendo to increase said "Content & Revenue."
• Satya Nadella confirmed that Xbox games will continue to come on more platform.

And some people are still under the delusion that Xbox won't put all its games on other platforms.

 

[Neilg]

It's pretty obvious this is because they got rid of LinkedIn profits (because there are none), and padding the already huge 70% that's covered by all cloud computing wouldn't have got by the board, I doubt it's going to move the needle for him.
He needs 3x less additional profit from azure to make the same increase in his end of year bonus.

I still think he's going to make their games multiplatform due to the massive acquisition, but that was already set in stone and isn't motivated by him trying to get a bigger bonus. You could strip Xbox from that completely and he wouldn't even notice.

 

[cash_longfellow]

If not all the big name exclusives were coming to PlayStation before, you can bet your ass they are now.

 

[thicc_girls_are_teh_best]

It's pretty obvious this is because they got rid of LinkedIn profits (because there are none), and padding the already huge 70% that's covered by all cloud computing wouldn't have got by the board, I doubt it's going to move the needle for him.
He needs 3x less additional profit from azure to make the same increase in his end of year bonus.

I still think he's going to make their games multiplatform due to the massive acquisition, but that was already set in stone and isn't motivated by him trying to get a bigger bonus. You could strip Xbox from that completely and he wouldn't even notice.

That's where the rumors of them changing their hardware business model to something more PC-like, and having OEMs make their own Xbox variants, probably factors in. Alongside a bigger push for all their games to be multiplatform going forward, as you just said.

They do need to give a concise, unified statement on that approach though by the time the next wave of Xbox devices are set to launch, so I'm expecting late 2025 or early 2026, they'll finally state how everything is going to be handled software-wise going forward. No more ambiguity. And, I expect SIE will do similar with their own games (for example, if internally they decide everything gets ported to PC 6 months - 1 year after or goes there Day 1) in terms of a public statement to cease ambiguities, by late 2027 at the latest.

If companies like Microsoft and Sony want to engage in multiplatform strategies, I think they owe customers the right to know upfront what their software strategy & release cadence is for the platforms they're supporting. That way, customers can decide what's best for them in terms of where to buy those games. This current cheekiness with Microsoft doing mixed messaging (e.g Satya says one thing, but Phil says something else, or influencers running ops for them say something else etc.) when it comes to PlayStation & Nintendo support, or Sony/SIE when it comes to PC & Nintendo support, has to stop at some point. It just makes them look indecisive and reactionary.

If they didn't want to deal with the optics or trouble areas involved with taking on a multiplatform strategy, the they shouldn't have engaged with one in the first place. Or, they could've taken an approach more like Nintendo did with mobile, where they made discrete spinoffs of select IP for that platform to retain value of the console versions on their own hardware (and perhaps influence mobile gamers to get a Switch to play other installments of those IP on Nintendo's system).

 

[Moriarty1889]

At this rate who knows if Satya will even let them release another piece of hardware. Seems all he wants is to share their software with everyone. This could very well be the end of Xbox hardware period. At least that’s the feeling I have on all of this.

 

[midnightAI]

At this rate who knows if Satya will even let them release another piece of hardware. Seems all he wants is to share their software with everyone. This could very well be the end of Xbox hardware period. At least that’s the feeling I have on all of this.

It does seem as though that's a possibility, also from this I'd argue he'd want to put an end to gamepass, but I suppose releasing on multiple platforms could offset that somewhat

 

[Topher]

At this rate who knows if Satya will even let them release another piece of hardware. Seems all he wants is to share their software with everyone. This could very well be the end of Xbox hardware period. At least that’s the feeling I have on all of this.

This isn't related to hardware at all. So yes.....he's going to push for more third party publishing, but since this is based strictly on revenue having more hardware on the way is only going to help push more software sales.

 

[sankt-Antonio]

Raising his paycheck by 70mill this year while laying off thousands of people should be banned somehow. This is the most US thing ever.

 

[EN250]

Guess we know why MS wants to push content to all platforms now.

Isn't HE the reason why MS wants to push content (services) everywhere without any HW ties?

 

[Topher]

Isn't HE the reason why MS wants to push content (services) everywhere without any HW ties?

He is the one that started talking about Xbox being on other platforms late last year. Many of us here on the forum picked up on that while others, like Jez Corden, tried to pretend that there was nothing to it.

 

[JohnnyFootball]

If not all the big name exclusives were coming to PlayStation before, you can bet your ass they are now.

It also means you can expect many more to come day and date.

Starfield is a game that they blew it so horrifically bad. They could have sold a good 5-10M copies on Playstation had it been a day and date title. To be fair, at the time Starfield was being seen as the game that would save Xbox....and that didn't come close to happening.

Right now, its probably a 2-3M seller on PS AT BEST given the mid reception it has received and the fact that Shattered Space has been so poorly received.

But Microsoft REALLY needs to get someone over Xbox who understands game development and what it takes to make good games.

Time to bring in people like Shawn Layden, Pete Hines, Peter Moore. Love them or hate them, they knew how to deliver good games.

 

[CLW]

I

Golden Parachute please

 

[CLW]

Raising his paycheck by 70mill this year while laying off thousands of people should be banned somehow. This is the most US thing ever.

The company’s value is up OVER 200% in 5 years. Just because 1 of its divisions absolutely SUCKS does not mean the ceo is doing a bad job.

Now Phil Spencer on the other hand….

 

[dragonyeuw]

Raising his paycheck by 70mill this year while laying off thousands of people should be banned somehow. This is the most US thing ever.

 

[EN250]

He is the one that started talking about Xbox being on other platforms late last year. Many of us here on the forum picked up on that while others, like Jez Corden, tried to pretend that there was nothing to it.

The letter from Satya last week settled everything if anyone still had a doubt, even for shills like Jez Corden

 

[IFireflyl]

Raising his paycheck by 70mill this year while laying off thousands of people should be banned somehow. This is the most US thing ever.

The 650 layoffs announced a couple of months ago was mostly corporate and support roles. Prior to that, I believe it was due to the ABK acquisition which resulted in people doing the same job. For example, Microsoft/Xbox has its own H.R. department. The H.R. department ABK had would have been pointless. I might agree with you if we were talking front line employees, but the majority of the layoffs haven't been front line employees.

 

[Sanepar]

Microsoft has everything on their hands to lead this industry in 10 years. Better infrastructure. 33 studios and they will buy more. 10 steps ahead from Sony on cloud. Better gaas games(cod, forza horizon, sea of thieves, diablo, wow).

 

[StereoVsn]

The 650 layoffs announced a couple of months ago was mostly corporate and support roles. Prior to that, I believe it was due to the ABK acquisition which resulted in people doing the same job. For example, Microsoft/Xbox has its own H.R. department. The H.R. department ABK had would have been pointless. I might agree with you if we were talking front line employees, but the majority of the layoffs haven't been front line employees.

MS laid off ~25k people over last 2 years. This isn’t just gaming division which is peanuts compared to the rest of the company.

 

[ChorizoPicozo]

im really concerned about it. Is he going to be paid enough?

 

[sankt-Antonio]

The company’s value is up OVER 200% in 5 years. Just because 1 of its divisions absolutely SUCKS does not mean the ceo is doing a bad job.

Now Phil Spencer on the other hand….

The more reason to simply pay the people who worked to achieve 200% value growth. What a backwards ass way of thinking, US economy and society at large have much more from a lot of people working at high paying jobs, than a couple multimillionaires hording wealth. If a multi trillion dollar company cant sustain some overhang who can?

 

[Danny Dudekisser]

This is honestly a worst case scenario for Xbox. It doesn't mean that Good Guy Satya's coming down from heaven to kick Sarah and Phil out on their asses and fix the brand. It means cutting costs and gradually turning Xbox into a profit center rather than a business that can actually invest in significant projects.

It's bad news.

 

[Topher]

This is honestly a worst case scenario for Xbox. It doesn't mean that Good Guy Satya's coming down from heaven to kick Sarah and Phil out on their asses and fix the brand. It means cutting costs and gradually turning Xbox into a profit center rather than a business that can actually invest in significant projects.

It's bad news.

But this is based entirely on revenue, not profits.

 

[adamsapple]

This is honestly a worst case scenario for Xbox. It doesn't mean that Good Guy Satya's coming down from heaven to kick Sarah and Phil out on their asses and fix the brand. It means cutting costs and gradually turning Xbox into a profit center rather than a business that can actually invest in significant projects.

It's bad news.

I don't know how you came to this conclusion lol

 

[Mister Wolf]

Hopefully Satya forces them to make a hybrid.

 

[Danny Dudekisser]

But this is based entirely on revenue, not profits.

Yes, and if you're going to bump those figures up in the coming year, you're going to do it by focusing on short-term plays with the stuff you already have on the slate, not by investing in the future.

 

[ReBurn]

If only he needed the money

 

[Topher]

Yes, and if you're going to bump those figures up in the coming year, you're going to do it by focusing on short-term plays with the stuff you already have on the slate, not by investing in the future.

MS execs are going to want to hit future targets as well so I doubt they are that short-sighted when it comes to their own incentive packages. To me, this just means the executives are telling stockholders that increasing game content and services revenue is one of their priorities. Nadella referencing other platforms in his annual letter tells you how he plans on doing that.

 

[cash_longfellow]

It also means you can expect many more to come day and date.

Starfield is a game that they blew it so horrifically bad. They could have sold a good 5-10M copies on Playstation had it been a day and date title. To be fair, at the time Starfield was being seen as the game that would save Xbox....and that didn't come close to happening.

Right now, its probably a 2-3M seller on PS AT BEST given the mid reception it has received and the fact that Shattered Space has been so poorly received.

But Microsoft REALLY needs to get someone over Xbox who understands game development and what it takes to make good games.

Time to bring in people like Shawn Layden, Pete Hines, Peter Moore. Love them or hate them, they knew how to deliver good games.

Agreed.

 

[DaleinCalgary]

If true yes MS has finally admitted defeat and become a 3rd party publisher.

It's too bad they really had something with the 360. Miss them blades

 

[SportsFan581]

I don't know how you came to this conclusion lol

IKR, it's Xbox content and services (which has been rolling along okay for the most part).

 

[Heisenberg007]

It also means you can expect many more to come day and date.

Starfield is a game that they blew it so horrifically bad. They could have sold a good 5-10M copies on Playstation had it been a day and date title. To be fair, at the time Starfield was being seen as the game that would save Xbox....and that didn't come close to happening.

Right now, its probably a 2-3M seller on PS AT BEST given the mid reception it has received and the fact that Shattered Space has been so poorly received.

But Microsoft REALLY needs to get someone over Xbox who understands game development and what it takes to make good games.

Time to bring in people like Shawn Layden, Pete Hines, Peter Moore. Love them or hate them, they knew how to deliver good games.

Exactly.

Their best chance with Starfield was to fool PlayStation people with the hype-train and sell 3-5 million copies before anyone realized how mediocre the game actually was.

They missed their chance, and now they can't do that anymore. This will surely play on their minds whenever they are about to launch a big game next time.

 

[Topher]

IKR, it's Xbox content and services (which has been rolling along okay for the most part).

Due nearly entirely to ABK, but yeah, since the acquisition revenue has increased substantially, as expected.

 

[Kerotan]

Guess we know why MS wants to push content to all platforms now.

Yeah hurry up and port Age of Mythology to PS5. My day 1 purchase will bump Satnya up to the next tier.

 

[James Sawyer Ford]

• Satya Nadella removed Game Pass from his bonus criteria.
• Satya Nadella tied his bonus with Xbox "Content & Revenue."
• Satya Nadella put Xbox games on PlayStation and Nintendo to increase said "Content & Revenue."
• Satya Nadella confirmed that Xbox games will continue to come on more platform.

And some people are still under the delusion that Xbox won't put all its games on other platforms.

Bububu fans like Colteastwood were crushed by the Indy announcement and Nutella has reconsidered their strategy…

 

[Deerock71]

Microsoft full-blown 3rd party now.

 

[pasterpl]

they got rid of LinkedIn profits (because there are none)

In the fiscal year 2024, LinkedIn's annual revenue amounted to more than 16.37 billion U.S. dollars, up from 14.9 billion U.S. years during the 2022 fiscal period.

LinkedIn: annual net revenue 2024 | Statista

In the fiscal year 2024, LinkedIn's annual revenue amounted to more than 16.37 billion U.S.

www.statista.com

I am sure that they are making healthy profit on linkedin, 1.7bn USD revenue just from subscription fees.

 

[Gamer_By_Proxy]

 

[Moriarty1889]

It does seem as though that's a possibility, also from this I'd argue he'd want to put an end to gamepass, but I suppose releasing on multiple platforms could offset that somewhat

Would love to see him kill off Gamepass as it has ruined the brand overall. Focus on software and trying to build a console base.

 

[PatientGamer]

If this doesn't convince folk that Xbox's future is 100% multi-platform & 3rd-party, then nothing else will.

Just because they will still have consoles is completely irrelevant now — it's simply additive to their strategy, but not core or even important to them.

Isn't GamePass set to generate $5.5bn in 2025? 'Xbox' is no longer tied to hardware at all.

Whilst PlayStation and Nintendo continue to be.

 

[TheThreadsThatBindUs]

Looool, this is the MS board of directors pissed at him for letting his bro Spencer blow through more than $70bln to buy Activision only to end up having to sign a 10yr deal to support PS with COD, meanwhile, GamePass subs growth tailed off and Xbox hardware sales tanked.

Basically, this is a sign Spencer will have no further control over Xbox. Nadella will be micromanaging the fuck out of him. So, all of Spencer's Xbot-pleasing wankery now goes out the window to pure calculated financial decisions aimed at making Xbox the most money possible to maximise the ROI on the Activision purchase. So, you can expect everything they do will be launched on every platform possible from now on.

 

[Hero of Spielberg]

From what I see there was no incentive for hardware last year, it’s just increasing the incentive for Xbox content and services.

Not sure why it’s being interpreted as a move to 100% 3rd party

 

[UltimaKilo]

Will not end well.

 

[awwr999999]

• Satya Nadella removed Game Pass from his bonus criteria.
• Satya Nadella tied his bonus with Xbox "Content & Revenue."
• Satya Nadella put Xbox games on PlayStation and Nintendo to increase said "Content & Revenue."
• Satya Nadella confirmed that Xbox games will continue to come on more platform.

And some people are still under the delusion that Xbox won't put all its games on other platforms.

'Other platforms' meaning PlayStation and Nintendo with a wide range of unproven platforms that likely won't be as big as either PS or Nintendo.
What happens if PS and Nintendo don't want to help MS?
MS previously tried to buy Nintendo and has never stopped trying to end PS and 'own' gaming like it once owned the World's PC operating systems.
MS being able to sell its games on PS and Nintendo eliminates the need to 'sell' Xbox consoles that are costing MS 100-200USD per unit.
Both PS and Nintendo would effectively be selling out their superior hardware IP to assist their most powerful corporate enemy. Playing MS games with DualSense or any of Nintendo's controllers > Xbox controller.
Without PS and Nintendo's generosity MS would be forced to keep losing money on each Xbox 'sale' while cannibalizing their own game IP via Gamepass subs on a range of inferior 3rd party devices.
These 3rd party devices will likely largely be streaming-only outside of potentially Macos and iOS. Apple could easily block MS and side with PS and Nintendo against the bigger enemy.
Firesticks, cheap smart TVs and cheap dongles will only serve to further weaken the collective Xbox brand until MS decides to cut its losses and refocus on PC gaming.
Xbox is rolling around in the fetal position looking for a way off of the pavement.
PS, Nintendo and Apple can generously help Xbox regain its footing or collectively put on steel-toe boots and kick Xbox until it stops moving.

 

[IDKFA]

If not all the big name exclusives were coming to PlayStation before, you can bet your ass they are now.

This.

Not just PlayStation either, but I'd bet they even have a few games lined up for the Switch 2 launch.

Halo: MCC on the next Switch? Yes please!

 

[AJUMP23]

They get rid of search, so maybe there is a real struggle there, or they have grown enough in search to be satisfied. A 5% increase is not that major, and missing the targets would be less than ideal but he probably will still be able to afford his yacht. At least he isn't or wasn't friends with Jefferey Epstein, a nice step up for a MS CEO.

 

[PurePlatinum]

Raising his paycheck by 70mill this year while laying off thousands of people should be banned somehow. This is the most US thing ever.

He is paid so highly BECAUSE he is the person willing to do such things. All the headlines have it mixed it.