2 min readJun 14, 2026 09:44 AM IST
First published on: Jun 13, 2026 at 01:48 PM IST
Rumours are circulating about a possible restructuring of Microsoft’s gaming branch, which may involve a spinoff or strategic partnerships, according to The Information. Sources cited by the news website say Microsoft is analysing several courses of action regarding the future of its gaming business. This includes forming a wholly owned subsidiary, engaging in a joint venture with other firms, and restructuring in a way that could make a future sale easier.
Currently, there are no immediate plans for changes. However, it appears Microsoft is rethinking the role of Xbox within the corporation. In spite of significant investments in recent years, the Xbox division has struggled to gain new ground.
In 2023, Microsoft acquired Activision Blizzard for almost $69 billion and aggressively advertised its services, especially Xbox Game Pass and cloud gaming. Simultaneously, the company faces declining console sales due to strong competition from rivals Sony and Nintendo, as well as a shortage of exclusive games.
For Microsoft, establishing a separate subsidiary entity will not be without precedent. Microsoft currently runs various operations such as LinkedIn and GitHub as wholly owned subsidiaries. The report suggests that this will give Xbox operational freedom while still falling under Microsoft’s umbrella.
This latest report follows news of Asha Sharma’s arrival as head of the gaming division in February. She is reportedly looking into investing in some of the company’s flagship game franchises, such as Halo, Fallout, and The Elder Scrolls.
According to the report, Microsoft CEO Satya Nadella and CFO Amy Hood approved plans to increase spending on premium game development for the upcoming fiscal year, though final budget decisions are still pending.
The restructuring discussions also come amid a separate Bloomberg report suggesting Xbox is preparing for significant layoffs and budget reductions in marketing and other departments next month.
Microsoft has not publicly commented on the reports. However, if the company moves forward with a restructuring, it could mark one of the most significant changes in Xbox’s 25-year history and reshape Microsoft’s gaming ambitions for years to come.
Report suggests that this will give Xbox operational freedom while still falling under Microsoft’s umbrella. (Image Source: Microsoft) 
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