Microsoft is exploring various future scenarios for its Xbox gaming business. According to The Information, discussions are underway within the company regarding the possible spin-off of the division, its transformation into a wholly-owned subsidiary of Microsoft, or the creation of a joint venture with external partners. According to the website’s sources, none of the options has been decided yet, but all remain under consideration.
These discussions come at a time when Xbox is facing challenges linked to falling console sales. The strategy based on Game Pass subscriptions and cloud services has not fully offset the weaker performance of traditional hardware. Furthermore, the platform is criticised for lacking a sufficient number of new hit titles that could attract players and boost sales.
The potential transformation of Xbox into a standalone subsidiary would not be a new development for Microsoft. LinkedIn and GitHub already operate in a similar manner, having retained significant operational independence following their acquisition by the group.
A new chapter for Xbox began in February 2026, when Asha Sharma took over as CEO of Microsoft Gaming, replacing the brand’s long-standing head, Phil Spencer. Sharma was previously responsible for AI product development at Microsoft and has been tasked with accelerating the growth of the gaming business.
According to reports by The Information, Microsoft’s management has approved a preliminary plan to increase investment in the development of major franchises such as ‘Halo’, ‘Fallout’ and ‘The Elder Scrolls’. The aim is to strengthen the games portfolio, which has remained one of the platform’s key assets for years. At the same time, Sharma herself has admitted in recent weeks that Xbox is too fragmented organisationally and should focus its resources on its most valuable brands.
There are also reports of planned redundancies and cost-cutting measures. Bloomberg previously reported on preparations for a major restructuring of the division, which could affect both staffing levels and marketing budgets.
Although Xbox’s future remains open, the direction is becoming increasingly clear. Microsoft is seeking a model that will increase business flexibility, accelerate the development of key games and improve the profitability of one of its most important assets in the digital entertainment sector.
