Report: Microsoft considering spin-off of Xbox

Microsoft might be planning to restructure its Xbox division, potentially transforming it into its own entity or keeping it as a fully owned subsidiary. This information comes via a report from The Information, relayed by Reuters. Additional options are being weighed as well, such as partnering in a joint venture to simplify Xbox's future sale.

CEO Satya Nadella and CFO Amy Hood have approved a proposal by Xbox's new head, Asha Sharma, to allocate increased funding for the development of key franchises like Halo, Fallout, and The Elder Scrolls. Although this budget boost is planned, it remains subject to change as it has not been finalized yet.

In a recent blog post celebrating her first 100 days in leadership, Sharma disclosed that excluding acquisitions like Activision Blizzard, over $20 billion has been invested in Xbox over the past five years. Despite this, the division has experienced an annual revenue drop of approximately $500 million. Moreover, there are indications of impending workforce reductions within the gaming division.

Speculation about Xbox's potential future sale aligns with Nadella's recent comments emphasizing the need to create a financially sustainable game division. During a live session of The New York Times' Hard Fork podcast, Nadella discussed the importance of innovation in both gaming hardware and software.

He pointed out the challenge of converting significant investments into sustainable business success, noting that much of the value generated by Xbox games happens on platforms like YouTube rather than directly benefiting Microsoft. Nadella stressed that the focus should remain on producing quality games and hardware in a financially responsible manner. Sharma, still in her initial months of leadership, has committed to reassessing the division's strategies to meet fan expectations.