Microsoft Weighs Spinning Out or Restructuring Xbox

Microsoft has explored options for reorganizing its Xbox gaming unit, including converting it into a wholly owned subsidiary or forming a joint venture with outside partners, according to people with direct knowledge of the discussions. No immediate restructuring has been scheduled.

One option under review would establish Xbox as a separate legal entity wholly owned by Microsoft. Company leaders have used that structure for other businesses, such as LinkedIn and GitHub; those involved in the talks noted a wholly owned subsidiary could make a future sale or separation easier.

Another option is a joint venture that would bring external investors or partners into Xbox. People familiar with the conversations said the company has considered a range of partners and scenarios but has not chosen a final plan.

The review comes as Microsoft plans to increase spending and speed up development of major franchise titles in the next fiscal year, which begins in July. Executives plan to prioritize investment and faster release schedules for franchises including Halo, Fallout and The Elder Scrolls.

Industry comparisons include Sony Interactive Entertainment, which operates as a wholly owned subsidiary of Sony Group Corporation. Those familiar with Microsoft’s internal review described potential changes as intended to provide clearer operational lines and greater flexibility.

Microsoft has not announced a formal restructuring. Executives continue to weigh strategic, financial and regulatory factors. Sources spoke on condition of anonymity because they were not authorized to discuss private deliberations.