Satya Nadella’s “Xbox competes with TikTok” comments don’t make sense — but not for the reason you think

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Xbox is currently changing and adapting as it figures out its future beyond traditional game consoles.

GameStop (and surprisingly, even the White House!) seems to agree that the competition is over, and PlayStation and Nintendo have clearly won over Xbox. However, Microsoft’s CEO, Satya Nadella, isn’t giving up on Xbox just yet and remains optimistic about its future.

Just yesterday, Satya Nadella discussed the next Xbox, referring to it as a “console” but notably avoiding actually saying the word “Xbox.” He appeared to confirm our earlier reporting that the new Xbox will be designed more like a PC, emphasizing that Windows is currently the leading platform for gaming worldwide.

He left out the fact that most platforms benefiting from Windows’ open nature don’t share any of their profits with Microsoft. However, it seems Nadella is focused on other rivals.

Satya Nadella agreed with former PlayStation executive Shawn Layden and Microsoft’s Matt Booty, stating that the biggest challenge for the gaming industry isn’t other gaming companies, but rather highly addictive short-form video platforms like TikTok and Instagram Reels.

People reacted to the statement, and the reaction was largely critical. Many felt Microsoft was avoiding responsibility for not being able to compete with PlayStation and Steam, and instead, was trying to blame others.

I see things a little differently, and it highlights a truth about Microsoft that we all generally accept. Does TikTok compete with Xbox? Yes, but Microsoft has only itself to blame. The reason is simply that Microsoft struggles to appear trendy or appealing to younger audiences.

Xbox and gaming DOES compete with TikTok, Instagram, etcetera …

Gaming competes for people’s attention with platforms like TikTok and YouTube Shorts. That’s why Netflix has started offering games – to draw users in and offer another way to entertain them.

Services for watching videos and listening to music online have become more popular, more quickly, than gaming. The same is true for social media apps like TikTok. People generally focus on just one leisure activity at a time, even if that activity is endlessly browsing negative news online.

I’ve been looking into how much time people actually spend on social media, and it’s pretty crazy. Most estimates I’ve seen put the average daily use around 2 to 3 hours per person – it really depends on the source, but that seems to be the general range.

People typically spend less time gaming, usually between one and two hours. Plus, the audience for gaming is smaller overall, especially if you don’t include very simple mobile games.

We all have limited free time, and many things compete for it – like watching Netflix, playing video games, or endlessly scrolling through bad news online. While you wouldn’t usually do these things at work, when you finally have a few hours to relax in the evening, quick and easy entertainment like TikTok often seems like the most appealing choice.

At least, to some degree.

Companies often highlight games like Fortnite and Roblox as exceptions to current trends, but I think these games are actually quite similar to social media platforms like TikTok and Instagram Reels in how people use them to connect.

Fortnite and Roblox are built around social interaction and reflect current internet culture. Roblox’s simple games are similar to endlessly scrolling through content on social media, complete with in-game chat and unique memes and trends that develop within the platform.

Microsoft has the potential and should be creating experiences that better match current trends. While Roblox is available on Xbox, the Xbox platform itself could be a strong competitor to TikTok and other platforms in capturing cultural attention – something Microsoft’s CEO, Satya Nadella, seems both interested in and unaware of how to achieve.

… but Microsoft’s anti-culture corporatism is WHY it can’t compete with social media.

Microsoft recently missed an opportunity to connect with users through its new Copilot AI feature. Instead of a relatable character, they’ve introduced ‘Mico,’ a simple, abstract shape, which appears when using Copilot’s voice functionality.

People aren’t interested in Mico, and it’s unlikely they ever will be. But there was a time when people *did* care about Cortana, when Microsoft first launched its AI assistant on Windows Phone.

As an analyst, I find Microsoft’s approach to acknowledging its past a bit puzzling. They clearly recognize the cultural impact of their older creations, evidenced by the hidden Clippy easter egg – though it takes a lot of effort to find! What’s more striking, though, is their reliance on Cortana, a character most famously known from the *Halo* video game series. It feels like a missed opportunity to fully embrace a more directly recognizable 90s assistant. They were so close to a real nod to nostalgia!

Microsoft is struggling to compete with TikTok because it seems hesitant to embrace what makes it unique. Instead of leveraging familiar, beloved characters like Clippy or Cortana, they’re presenting a bland and forgettable image. Plus, rebranding established and recognizable brands as simply “Whatever 365 Copilot” is a misstep.

When Satya Nadella compared the Xbox plan to the Office plan, I was extremely skeptical – honestly, I couldn’t believe what I was hearing. It felt like a really misguided comparison.

The same thinking that equates playing games with using work software is why Xbox struggles to compete with TikTok. It’s not that TikTok is a better platform in itself, but rather that it’s filled a void by offering a lively and authentic space, unlike the rigid and impersonal environment Xbox has become.

As a huge Xbox fan, I have to say their social features are… well, hidden. It feels like you have to dig through endless menus to find them, and they really don’t make it easy to connect with friends. What’s even more frustrating is the PC app – I can’t even respond to updates from the game developers! And sharing clips or anything you create? Forget about it. It’s the complete opposite of Steam, which has naturally evolved into a place where people actually *hang out* and share things – Xbox feels like it’s actively trying *not* to be social.

As an analyst, I often see a disconnect in how Microsoft views its entertainment division. The same thinking that equates gaming with productivity software – like Microsoft Office – is, in my opinion, precisely why Xbox struggles to gain traction against platforms like TikTok. It’s a fundamental misunderstanding of what motivates and engages today’s audiences.

I understand Microsoft is being careful, and that moderation and safety are vital for online platforms. However, most players are adults and don’t require such strict oversight. Microsoft already has effective tools in place to safeguard children, so a less restrictive approach for everyone else would be reasonable.

TikTok and Roblox are becoming increasingly popular because they offer people a space to be authentic, share their ideas, and connect with like-minded individuals.

Xbox has been hesitant to fully engage with social media, which has both positive and negative consequences. Interestingly, Roblox is actually more popular than Steam.

The popularity of these games isn’t about the gameplay itself, but rather the strong sense of community and the constant creation of internet memes. Considering Microsoft also owns Minecraft, a game with similar social opportunities, it’s surprising they haven’t recognized this trend.

Xbox, and other similar companies, are becoming less competitive because they’re too focused on being safe and controlled. They need to adopt a more flexible approach, and doing so doesn’t have to mean sacrificing user safety.

Microsoft DOES NOT get social media, and is at the very apex of uncool.

TikTok is taking attention away from gaming, but it doesn’t have to. Microsoft seems to think this is just because younger generations prefer TikTok, and they can’t change that. However, I believe blaming TikTok is an easy way out. Xbox has millions of users, and it could easily be made more interactive and social – even more so than TikTok.

Microsoft used to offer features on Xbox that allowed for shared experiences, like the 1 vs. 100 game, Netflix watch parties, and social feeds where players could share updates and see what their friends were doing. Unfortunately, those features are no longer available.

It’s clear there must be a way to keep players engaged even after they finish playing with friends, and that solution likely involves social features. I don’t have the answers on exactly what that would look like, but simply giving up or pointing fingers isn’t the right approach.

Since Satya Nadella became CEO, Microsoft has largely shifted away from direct competition, focusing instead on creating the tools and platforms that *others* use to compete.

The core issue is that its refusal to genuinely compete with others in its field will prevent it from contributing to the industry’s growth, which goes against what it claims to want.

Satya Nadella believes innovation needs strong profits, and profits depend on having happy customers. Microsoft’s upcoming Xbox seems to be heading towards a more flexible system, but if it doesn’t succeed, it could end up just being a complicated way to play PC games through Steam.

If Microsoft wants to seriously challenge TikTok, it needs to embrace the advanced social features that its rivals are quickly building and improving. Avoiding these features will hold them back.

Microsoft’s problem isn’t just a lack of good social features—the company simply doesn’t feel current or exciting. For a short time, Panos Panay’s impressive Surface product launches gave the impression that Microsoft could be a trendy brand. However, that feeling has faded, and I believe Xbox is now paying the price.

I don’t have any proof, but I believe the gaming platform that successfully integrates with a strong social network will likely dominate the market in the years to come.

This feature could integrate with video content, keeping users engaged with the platform even when they’re not playing games. I doubt Microsoft has the right image to really pursue that idea, but Steam seems like a good fit.

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2025-10-31 16:12