Microsoft Considers Selling XBOX Brand Amidst Restructuring and Layoffs

Heading into Summer Game Fest, it was nothing but good news for the XBOX brand.

The company recently announced a new record for monthly active XBOX users. The company was set to celebrate its 25th anniversary in a big way, including the return of console-exclusive games (Gears of War: E-Day and Clockwork Revolution), as well as a limited-edition XBOX console.

Since Summer Game Fest, though, there have been some dark clouds brewing over XBOX HQ.

Earlier this week came the news that the company was planning "significant" layoffs next month. Then Matthew Ball, chief strategy officer for XBOX, was talking an awful lot about the allure of cloud gaming, which seems like a contradiction with their pivot of returning to consoles. That was just the tip of the iceberg; it seems like even bigger news may be coming.

Microsoft is Reportedly Seriously Considering Selling the XBOX Brand

Aaron Holmes of The Information recently reported that Microsoft is looking to overhaul its XBOX gaming division. This, in itself, isn't exactly groundbreaking news. Despite all the success the company saw during the Xbox 360 days, it's been falling rapidly behind Sony and Nintendo since the days of the Xbox One.

With layoffs looming and new CEO Asha Sharma still growing into the role, there's a lot of uncertainty. This includes a possibility of Microsoft "spinning out or restructuring [XBOX] as a wholly-owned subsidiary, which could make it easier to sell, or creating a joint venture with other partners, according to three people with direct knowledge of the discussions, Holmes says.

What would this mean? A number of things. As a joint venture, that means other companies can purchase an ownership stake in XBOX. Should Microsoft go the wholly-owned subsidiary route, as Sony Interactive Entertainment is, what it's worth, XBOX would no longer be able to keep Microsoft from footing the bill; they'd be forced to become profitable. Microsoft wouldn't be XBOX's sugar daddy anymore; they'd have their backs against the wall to perform.

To be fair, Holmes also adds that Microsoft does not currently have any imminent plans to restructure, but all options are reportedly on the table.

No Matter What Happens, XBOX's First-Party Games Need to Release at a Faster Pace

One way to ensure XBOX performs is to have a steady cadence of releases for their highest-profile games.

We're going on five years now since the release of Halo Infinite, and the next Halo title is a remake of Halo: Campaign Evolved. We haven't seen a traditional Elder Scrolls game in well over a decade at this point, though Bethesda has been busy with Fallout 4 and Starfield. They began full production on Elder Scrolls VI in 2023, so hopefully we'll learn more about it as soon as next year (it was never happening this year).

Speaking of Fallout, despite the runaway success of the Prime Video series, it's also been nothing but crickets for a single-player Fallout game in nearly a decade. Something has to be done about this, and Holmes adds that a faster development timeline for these franchises is an area of focus for Sharma.

This, combined with a return to console exclusives, would, in theory, help turn the page for the XBOX brand. The Xbox 360 dominated the marketplace through great exclusive games like Halo 3, Gears of War, and, at the time, Mass Effect. We know that their first-party studios are still capable of delivering incredible games; Forza Horizon 6 is the latest example of that. It's clearly now time for XBOX to put up or shut up.

No matter what ends up happening, it's clear that there are major changes coming to the XBOX brand, and not all of them will be good.