Microsoft reportedly considering restructuring Xbox into its own “wholly-owned subsidiary” and “moving faster” on releasing first-party games

Microsoft is considering a major restructuring of its Xbox division, according to reporting from The Information. While no changes are imminent, the company hasn’t ruled out converting Xbox into a wholly-owned subsidiary, spinning it off as a separate company, or creating a joint venture with other partners. Such a move would give Xbox greater autonomy from Microsoft’s corporate structure.

The potential restructuring comes as Xbox operates under new CEO Asha Sharma, who is overseeing a strategic “reset” of the gaming division. Among her priorities is accelerating development on major franchises—particularly The Elder Scrolls, Fallout, and Halo—to capitalize on Xbox’s most valuable intellectual properties.

The restructuring consideration reflects broader challenges facing Xbox. Recent releases including Avowed, Forza Motorsport, and Hellblade 2 have underperformed in terms of sales and Game Pass retention. Microsoft is simultaneously preparing significant layoffs within the Xbox division and reevaluating plans for its next-generation Project Helix console. Industry challenges cited include rising hardware costs and increasingly bloated development timelines.

The reported consideration of a subsidiary structure or spinoff suggests Microsoft is exploring structural solutions to make Xbox more competitive and efficient. Spinning off or creating a subsidiary could allow the gaming division to operate with its own budget and strategy independent of larger corporate decisions, potentially enabling faster strategic pivots and a more sustainable business model.

Microsoft reportedly considering restructuring Xbox into its own “wholly-owned subsidiary” and “moving faster” on releasing first-party games

Sources