Over the years, Microsoft’s Xbox division has been subject to rumors that the company would sell its gaming business. Certainly, after the relative failure of the Xbox One launch, Microsoft had a good reason to make such a sale. However, over the last two years, Xbox has thrived. Now, CEO Satya Nadella is very happy with Microsoft’s gaming plans.

Speaking at the Morgan Stanley Technology, Media & Telecom Conference in San Francisco, Nadella was positive about Xbox. Among his comments, he said he is “very happy” with the gaming division.

As well he should be. Xbox One launched to a sea of controversy as Microsoft tried to stifle gamers with an always connected model. The company also sold the console as a living room entertainment unit as much as a gaming machine. Gamers were angered and Microsoft paid the price.

Sony’s more straightforward PS4 was sold as a gaming machine pure and simple, and consumers responded. Because of that poor start to life, Sony will win this generation of home consoles in terms of pure sales. However, Xbox One has recovered in style thanks to some intelligent moves by Microsoft.

Re-focusing on gaming helped and that was encapsulated by the Xbox One X, the world’s most powerful console.

At the event, Nadella said the company’s focus on Xbox Live presented a “huge opportunity” for growth. Indeed, the CEO believes Microsoft has not received enough credit for its innovations in gaming:

“One of the things that most people have not recognized is that we’re the owners of both of those,” he said about Xbox and Windows Gaming.

“That’s where we’re going, whether it is with our subscription offerings with Game Pass, whether it’s with Mixer, which is growing very rapidly, in terms of streaming, or eSports franchises around our first-party games,” added Nadella. “So I think we have many, many leverages there. But fundamentally, it comes from that heritage of having been in the gaming business for multiple decades at this point and built up that capability in a world where we now have the ability to take that and have it service a much broader marketplace than ever before.”

Profitability

At the start of last month, Microsoft’s financial results for the last quarter were announced. The company showed that Xbox is growing into one of its core businesses and helped drive growth.

Microsoft reports the division increased 8 percent in overall revenue. In terms of hardware, the Xbox One X pushed the division to a 14 percent year-on-year increase. It also seems gamers are purchasing software to enjoy on their new console. Xbox software revenue increased 4 percent, while Xbox Live users grew by 7 percent. Microsoft says it now has 59 million active users on the service.