Microsoft's Xbox Division Considers Spin‑Off Amid Profit Slump

Microsoft's Xbox gaming division, led by CEO Asha Sharma since February 2026, posted a 3% profit margin and a loss of roughly $500 million over the past five years, prompting the company to explore restructuring options. A report from The Information says Microsoft has not ruled out spinning off Xbox as an independent subsidiary, creating a joint venture with external investors, or even selling the unit, though no decision has been made.

The division spent more than $20 billion on content, platforms and hardware subsidies and absorbed the $68.7 billion Activision Blizzard acquisition, yet revenue fell about $500 million and hardware sales dropped 33%. Internal memos cite a complex, bloated infrastructure that hampers innovation, and the company is planning significant staff cuts in July and a reduction in marketing spend. Despite the financial strain, top‑tier franchises such as Halo, Fallout and The Elder Scrolls will continue to receive priority funding, and the leadership aims to make Xbox the world’s largest gaming company by 2030 through technology modernization, greater internal autonomy, and possible new acquisitions.