Microsoft expects to continue its dominance in several sectors, including the gaming industry. However, with the growth of subscription services stalling in the US, the company has found it difficult to grow its current subscriber base.
Xbox Game Pass has been stuck at around 25 million subscribers for a while. Other parts of Microsoft’s business have also stalled, forcing lower compensations for CEO Satya Nadella and other executives.
Why it matters: The reduction in compensation indicates that Microsoft has underperformed in several areas, missing the targets that these executives set out to achieve.
In the case of Xbox, Microsoft hoped to achieve 4.4% growth in the revenue from Xbox content and services. However, the gaming giant was only able to achieve 0.7% growth.
Since then, the company has eliminated Xbox Game Pass growth as a performance metric for the CEO, moving to broader indications for its performance in the gaming industry.
In Satya Nadella’s case, his compensation is down from $54.9 million to $48.5 million. Microsoft President Brad Smith has faced a similar cut, down to $18.1 million from $23.4 million.
While the reduction in compensation means that Microsoft was unable to reach new benchmarks, the CEO was still able to get close to many of the goals set earlier. Nonetheless, the company remains confident moving forward.
Despite such figures, the CEO is not concerned about Microsoft’s gaming endeavors.
Having successfully acquired Activision Blizzard, he intends to double down on the gaming business. Activision is expected to lead a new era for Game Pass and Xbox, bringing millions of new users to the platform through an ecosystem that expands to other consoles and devices like smartphones.
Having suffered layoffs and dealing with a tough economy, Microsoft is not alone in struggling to cope with the changing landscape. Nonetheless, Activision Blizzard’s support could help the tech giant move forward.
This acquisition may have also played a part in the missed targets since Microsoft likely hoped to complete the deal and reap the benefits of the $68.7 billion merger much earlier in the year.
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