Microsoft may consider Xbox spin-off or joint venture as console business struggles

[Daniel Sims]

Looking ahead: Since taking over Xbox earlier this year, Asha Sharma and Matt Booty have hinted at radical changes in the coming weeks to turn Microsoft's struggling game console business around. New reports indicate that little is off the table, including steps that could lead to a sale of the division.

People familiar with the matter told The Information that Microsoft executives have not ruled out restructuring Xbox as a wholly owned subsidiary or even a joint venture. Although no such plans are currently in place, they remain a possibility.

If doing so would turn Xbox's fortunes around, Microsoft could reorganize the division into something resembling its other subsidiaries, such as LinkedIn and GitHub. The tech giant could also find a partner to run Xbox as a joint venture or spin the division out. As the news spread, former PlayStation CEO Shuhei Yoshida rather pessimistically predicted that Xbox would "dissolve" into Windows, possibly referencing Microsoft's plans for the next Xbox console, codenamed Helix, to support PC games.

Asha Sharma has promised a dramatic change of course since becoming the new Xbox CEO in February. So far, that has included included turning away from multiplatform game releases and lowering the cost of Microsoft's Game Pass subscription service.

In a recent memo, Sharma hinted at more big changes on the horizon, which could include significant layoffs to help control costs. Chief Strategy Officer Matthew Ball also recently floated the idea of using in-game ads to help offset costs. Spending tens of billions of dollars on game studios and content over the past several years has not lifted Xbox console sales, the division's profitability is falling, and the gaming industry at large currently faces skyrocketing memory costs.

Despite the challenges, Microsoft CEO Satya Nadella and CFO Amy Hood have given Sharma the green light to increase spending to expedite the development of major franchises such as Halo, Fallout, and The Elder Scrolls. While another Xbox titan, Gears of War, is receiving a prequel later this year, Halo, Fallout, and The Elder Scrolls have not seen significant new releases in several years.

Microsoft is set to release a remake of the first Halo title next month, but the status of the next installment's development remains unclear. After Halo Infinite's disappointing 2021 launch bruised the Xbox Series X/S rollout, developer 343 Industries was reorganized into Halo Studios, and the next entry shifted from an in-house engine to Unreal Engine 5.

Meanwhile, Bethesda's The Elder Scrolls VI is nowhere to be seen eight years after its initial announcement. Since shipping Starfield, which also failed to revive Xbox sales, the studio has shifted to The Elder Scrolls VI, but CEO Todd Howard recently confirmed that it remains years away. The last installment, 2011's The Elder Scrolls V: Skyrim, is one of the best-selling games of all time.

Fallout seems even further out – Bethesda does not plan to start production until after finishing The Elder Scrolls VI. However, a remaster of Fallout 3 is rumored to be coming soon. In the meantime, fans have hoped that Microsoft might hand Fallout to Obsidian, which currently employs Fallout creator Tim Cain and others involved with the first two installments. InXile, another Microsoft subsidiary, also has links to the franchise.

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Microsoft may consider Xbox spin-off or joint venture as console business struggles

 

[themastergoose]

On the hardware side this isn’t surprising because you’ve not needed Xbox hardware for many years to play Xbox games if you already have a PC.

On the software side of things gamers are likely fed up of rehashed franchise titles offering less content for a lot more money (and the games being boring/repetitive as a result). Couple that with the rising subscription costs they roll out earlier this year I’m surprised they’re (apparently) surprised it’s not working out for them.

Who’d have thought…

 

[LordVile95]

On the hardware side this isn’t surprising because you’ve not needed Xbox hardware for many years to play Xbox games if you already have a PC.

On the software side of things gamers are likely fed up of rehashed franchise titles offering less content for a lot more money (and the games being boring/repetitive as a result). Couple that with the rising subscription costs they roll out earlier this year I’m surprised they’re (apparently) surprised it’s not working out for them.

Who’d have thought…

If they made it so you could buy a game on Xbox and play it on PC for the entire store I’d buy more games on Xbox and dump steam. I suspect a few others would too.

 

[Megalomaniac]

This console generation has been extremely disappointing. PC gaming has gotten less expensive and even gaming on MAC has gotten less expensive. Console gaming has gotten more expensive and the pay off is fewer genres of games, less variety and fewer desirable exclusives.

With Xbox 360/PS3/Wii we used to have dance games, music games, rythm games...now it's just shooters and RPG. I used to buy DDR games every year. I mastered Guitar Hero drums - I had an iOn rocker.

Now: games are boring and loaded with politics or other distractions.

Xbox was right to move away from consoles. The way I see it, Xbox games should have been Games for Windows compatible or Xbox should have been treated more like a personal computer. Consoles can't even hope to keep up with advances in PC graphics at this point since Nvidia dominates and their hardware is getting aggressively more expensive as it increases in performance.

 

[GeoffreyA]

TES6 would be welcome.

 

[m4a4]

It sounds like making games to please their HR departments instead of their audience of gamers is catching up to them too. Bloated development costs and underperforming games are solely responsible for this.

When one of your most exciting games in recent memory is a remake (TES: Oblivion), you're doing something wrong.


And then, doing exclusives (especially now) is stupid. More customers = more revenue

 

[MasterMace]

MicroSlop's software business sucks so bad it's killing their hardware business

 

[godrilla]

Seen a comment when she became CEO that she would be used a s scapegoat fallguy. Hopefully from the ashes comes a phoenix lol. One thing missing also from current generation Xbox is the efficiencies it brings to the table for game development. Direct x 12 improvements to ray tracing is a great start but a bit late especially when Sony's pssr2 to very competitive to even Dlss when it comes to image quality as of late as an upscaler.
Gamers want to be excited for something new and shiny weather it be nice new graphics or better performance, new creative IPs without identity politics and not a premium subscription model especially with ads filled with corporate ai slop via vibe coding.
Once the ai bill comes due everyone will reneg to their previous positions imo or somewhere resembling the silhouette.

 

[Vixiy]

It wasn't already a wholly owned subsidiary?

 

[Theinsanegamer]

TES6 would be welcome.

TES6 is going to be a shadow of a shadow of a shadow of an actual RPG with no real content and no passion or soul. See also: starfield.

If they made it so you could buy a game on Xbox and play it on PC for the entire store I’d buy more games on Xbox and dump steam. I suspect a few others would too.

You and all 5 other people who hate Steam's deep discounts and AAA customer support and would prefer to run into the hands of the multi headed customer hating hydra that is Microslop.

This console generation has been extremely disappointing. PC gaming has gotten less expensive and even gaming on MAC has gotten less expensive. Console gaming has gotten more expensive and the pay off is fewer genres of games, less variety and fewer desirable exclusives.

With Xbox 360/PS3/Wii we used to have dance games, music games, rythm games...now it's just shooters and RPG. I used to buy DDR games every year. I mastered Guitar Hero drums - I had an iOn rocker.

Now: games are boring and loaded with politics or other distractions.

Xbox was right to move away from consoles. The way I see it, Xbox games should have been Games for Windows compatible or Xbox should have been treated more like a personal computer. Consoles can't even hope to keep up with advances in PC graphics at this point since Nvidia dominates and their hardware is getting aggressively more expensive as it increases in performance.

You know, I originally thought that the whole "use your console as a PC" idea was terrible, but after seeing the excitement of people getting linux on a PS5, maybe they have something there.

On the software end they are totally toast. The new GoW is typical "modern audience" garbage, and the "new" halo is a re re release of a 25 year old game, well, half of that game, for near the price of a new game, still running on the original code, made mostly by contractors.

There's nothing left of the OG MS studios that made them so good in the 2000s.

 

[GeoffreyA]

TES6 is going to be a shadow of a shadow of a shadow of an actual RPG with no real content and no passion or soul. See also: starfield.

Probably. Even Skyrim showed decline. But an Oblivion fan can do nothing but hope. Also awaiting HL3 for 19 years but these days I feel as if I (almost) don't care any more: delays and lack of communication are disillusioning. At present, enjoying Requiem but stuck with a puzzle.

 

[m4a4]

TES6 is going to be a shadow of a shadow of a shadow of an actual RPG with no real content and no passion or soul. See also: starfield.

I know I expect this (as someone who put hundreds of hours each into Morrowind, Oblivion, and Skyrim). The Bethesda of old is long dead, replaced by non-gamers and people who are not passionate about what they make. Just like all the other nostalgic western studios (like Bungie, BioWare, etc).

 

[SRB]

Here we go again....decisions on large portions of a business decided by stock value. Remember, it's not IF you make money anymore, it's HOW MUCH. Considering how Microsoft treats XBox, like a poor stepchild, it's a wonder they aren't losing money. When Xbox was profitable, they weren't satisfied with that, they had to expand the reach. make it an entertainment hub, LIke many companies, they think their core product (games) are doing fine and don't need to do anything about that. At least Sony knows the Playstation is about gaming, not music, social media, videos and movies. They may tag something on as an afterthought, but never lose focus.

Xbox is doomed as long as Microsoft runs it. Not enough potential shareholder value, they're too busy chasing AI with the same mindset.

 

[axiomatic13]

I might have a tad bit of sympathy if Microsoft had not made a long career out of buying competitor game studios just to kill them off.

 

[ExReey]

Phil Spencer singlehandedly destroyed the Xbox brand.
And now they're trying to pick up the pieces.

Well done Phil.

 

[LordVile95]

You and all 5 other people who hate Steam's deep discounts and AAA customer support and would prefer to run into the hands of the multi headed customer hating hydra that is Microslop.

Steam is the thing that keeps PC game prices high and their “discounts” aren’t actually as deep as you think they are.

I would rather own a game that I can play in my PC and on a TV friendly console rather than buy it twice.

 

[toooooot]

We wanted to become Netflix of gaming, but this is eating so much money that we are tearing between cancelling it or drastically change to lower the financial burden--Xbox.

 

[Theinsanegamer]

Steam is the thing that keeps PC game prices high and their “discounts” aren’t actually as deep as you think they are.

Steam's sales are far deeper then anything the Xbox store ever manages. We have years of price history to back that up.

I would rather own a game that I can play in my PC and on a TV friendly console rather than buy it twice.

Or you can figure out Steam Big Picture mode and enjoy your entire PC catalog on a TV without needing a console.

 

[Alpine7995]

The Xbox situation in one sentence: they spent tens of billions acquiring some of the most valuable franchises in gaming history and their plan to save the division is in-game ads.

 

[NumberNine]

I'm just here to point out that man's last name is Booty. There is a whole Booty lineage out there.

 

[LordVile95]

Steam's sales are far deeper then anything the Xbox store ever manages. We have years of price history to back that up.

Yet I can get games cheaper on Xbox. Weird that. Yet black ops 2 is still like £40 on steam.

Or you can figure out Steam Big Picture mode and enjoy your entire PC catalog on a TV without needing a console.

Which is still poor, doesn’t function well most of the time and still requires a keyboard and mouse

 

[opckieran]

They're charging too much for non-exclusives that most people aren't interested in anyways. They're stuck in the early/mid 2000's mindset of leaning on successful AAA IP and sequels instead of coming up with something fresh.

 

[Anton Longshot]

Let me explain.
It's a long-standing tradition that Microsoft ruins whatever they're into before giving up on it altogether.
This is not because they make stupid mistakes but because they're incredibly skilled at 5D strategy ploys that are way beyond the understanding of common people.
In this case I suspect it's a heavily camouflaged prelude to the triumphant return of Windows Mobile.
I could be wrong though as I'm actually one of those common people.

 

[Billybobjoey]

Yet I can get games cheaper on Xbox. Weird that. Yet black ops 2 is still like £40 on steam.

From what I'm seeing Black Ops 2 is still full price ($60) on Xbox and Steam. If you have game pass it looks like it's currently on sale for $20, and was last on sale on Steam for that price at the end of March. The fact that Activision and now subsequently Xbox are still charging $60 full price + DLC for these ancient titles is ridiculous. One of the good things about Xbox is you can buy a used disk copy on ebay and the like for $10~$20, but they're doing their best to not include disk drives going forward. Series S? Out of luck. Digital Series X? Also locked to the digital store. I highly doubt the next Xbox even gives an option to include a disk drive at this rate.