Microsoft considers spinning out Xbox into subsidiary

Microsoft is weighing options to restructure its Xbox division, including turning it into a wholly-owned subsidiary. The move aims to boost the business performance of the gaming unit.

A report from The Information indicates Microsoft has not ruled out reorganising Xbox or creating a joint venture with partners. No immediate changes are planned, but such steps remain under consideration to improve Xbox as a business.

The division is also expected to accelerate development of new games from its owned franchises. Fallout and The Elder Scrolls have been highlighted as particular priorities under new CEO Asha Sharma.

Additional reports mention potential staff reductions and marketing budget cuts starting in July. Sharma has publicly noted that Xbox is not currently in a healthy spot financially.

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Illustration of Microsoft Xbox layoffs showing office workers packing boxes
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Microsoft cuts 4,800 jobs amid Xbox restructuring

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Microsoft announced major layoffs across its gaming division and other units on July 6, 2026. The cuts total 4,800 positions, or 2.1 percent of the global workforce. Xbox is divesting several studios as part of the reset.

Xbox's new chief executive Asha Sharma plans to speed up development of major franchises such as Halo and Fallout. Resources will be shifted from lower-performing areas while overall budgets stay flat. Microsoft leaders have approved the changes for the coming fiscal year.

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Xbox CEO Asha Sharma said a healthy console business is necessary but not sufficient for success. She spoke in an interview amid ongoing layoffs at Microsoft Gaming.

Microsoft's Xbox division has hired Matthew Ball as chief strategy officer and Scott Van Vliet as chief technology officer, continuing the leadership adjustments under gaming boss Asha Sharma.

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Microsoft is set to begin layoffs across its Xbox division on July 6. The plans reportedly include closing Arkane Studios and canceling the Blade game.

Xbox executives have clarified the company's approach to console exclusives following announcements at the Summer Game Fest.

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A new report has described an atmosphere of uncertainty and fear among remaining staff at Xbox following recent restructuring by Microsoft.

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