Microsoft weighs Xbox spin‑off as new head Asha Sharma drives Halo and Fallout overhaul

Microsoft is conducting internal analyses of its Xbox division, considering three structural options: keeping the current arrangement, converting Xbox into a subsidiary, or fully separating it into an independent company. No decision has been made, but the fact that these scenarios are being examined signals the company's strategic direction for gaming.

Asha Sharma, newly appointed CEO of Microsoft Gaming, has received endorsement from CEO Satya Nadella and CFO Amy Hood to invest heavily in flagship franchises such as Halo, Fallout and The Elder Scrolls. The division currently operates on a thin profit margin of about 3 % and its gaming revenue is $2 billion lower than five years ago, despite $80 billion spent on acquisitions and a $276 billion purchase of Activision Blizzard.

Because of the weak financial performance, Microsoft is contemplating major cost‑cutting measures, including a wave of layoffs of at least 1,000 employees after the fiscal year ends on 30 June. Studios such as Compulsion Games and possibly other smaller but prestigious teams like Ninja Theory and Double Fine are reported to be at risk.

On the hardware side, rising component costs have prompted a shift toward a “Helix” platform that would partner with external manufacturers to produce Xbox‑branded devices, an approach already hinted at with Asus’s ROG Xbox Ally. Meanwhile, Game Pass has seen subscriber losses after price hikes; recent price reductions and the removal of new Call of Duty titles aim to stabilize the service, and a cheaper, ad‑supported tier is being planned.

Upcoming releases for 2026 include a Halo campaign remake, a Fallout 4 Anniversary Edition for Nintendo Switch 2, and other titles such as Forza Horizon 6 and Fable, illustrating the aggressive content pipeline under Sharma’s leadership.