Report: Xbox may be spun off into subsidiary or joint venture with another company

Microsoft could reset Xbox by spinning off the games unit into a separate company, sources tell The Information.

2

Xbox is stealing headlines lately. Profit margins are down to a dismal 3%, Game Pass has lost millions of subscribers, and revenue has been down $500 million across the last five years despite $20 billion invested into the ecosystem. Games are underperforming, and more layoffs are expected as Xbox right-sizes its spending and plans for a leaner future.

New reports from The Information indicate that Microsoft may spin out Xbox as its own group. Xbox belongs to More Personal Computing, the same segment as Windows, and this is by design--the Xbox gaming platform has included both Windows PCs and consoles for over a decade now.

The new structure could see Microsoft treating Xbox similar to LinkedIn after the spin-off.

Other options include a joint venture, similar to the deal that Ubisoft made with Tencent in order to form the Vantage Studios subsidiary and essentially save the company from having to sell its assets to repay debts.

There's also the possibility that Xbox will restructure its business, potentially leading to studio shut downs. Analysts tell IGN that this is likely to happen, and taking a closer look at Microsoft's current structure, the games unit is a veritable Rome of Gaming, so to speak, with over 20 groups across three divisions: Xbox Game Studios, Activision Blizzard King, and ZeniMax Media (Bethesda).

Microsoft has made parts of its strategy clear to fans, and when something is decided, the team may just reveal their ideas and plans when they materialize.

For now, Xbox has decided that it will revive exclusive console games, but this is tough to conceptualize when a big reset is looming.