Microsoft weighs splitting Xbox as it speeds up Halo, Fallout and Elder Scrolls development

Microsoft is exploring options for its Xbox division, including turning it into a wholly‑owned subsidiary, forming a joint venture or even selling the business. The plans are not imminent, but senior executives Satya Nadella and Amy Hood have told new Xbox CEO Asha Sharma that restructuring options remain on the table.

At the same time, Sharma is pushing to accelerate development of flagship first‑party franchises – Halo, The Elder Scrolls and Fallout – with additional budget earmarked for new titles. The company also announced upcoming staff layoffs in July and a potential cut to Game Pass marketing spend as part of a broader “reset” aimed at making Xbox profitable.

These moves come after a rocky period for the console brand, with mixed sales performance and heavy investment in acquisitions such as Bethesda and Activision Blizzard. The outcome could reshape Microsoft’s gaming strategy and impact the wider console market.