Tech giant Microsoft is reportedly considering spinning off Xbox as a separate entity or restructuring the games division as a wholly owned subsidiary.
That’s according to The Information – via Reuters – which says that this is just one option that it is considering; others include making a joint venture with other partners, in order to make it easier to sell Xbox.
It’s also reported that Microsoft’s CEO, Satya Nadella, and CFO, Amy Hood have approved a plan by newly-appointed Xbox boss Asha Sharma to increase spending in order to speed up development on blockbuster franchises like Halo, Fallout and The Elder Scrolls. This budget, however, is yet to be finalised and there could still be changes.
To mark her first 100 days as CEO, Sharma wrote a blog post, in which she said that – excluding Activision Blizzard – Microsoft has spent over $20 billion on Xbox over the last five years. She added that revenue has dropped by around $500 million per year. Microsoft’s games arm is also reportedly planning for further layoffs.
Word that Xbox could be up for sale at some point in the future comes alongside comments from Nadella, who recently spoke at a live recording of The New York Times’ Hard Fork podcast, where he said that the games division needs to be turned into a “sustainable business”.
“The challenge now for us is to think about how to innovate both in hardware as well as in the games going forward in a world in an economically viable way,” Nadella said.
“I think one of the things that Asha, who has just taken over Xbox, put out is that we’ve invested a lot. No one can accuse Microsoft of not having invested for the last 25 years. And now we have to turn this into a sustainable business that delivers what is fundamentally one of the best sources of entertainment.
“Still, the challenge we have is we’ve not been monetising that entertainment. In fact, if anything, we’ve been subsidising that entertainment. In fact, there’s more monetisation of Xbox games happening on YouTube than at Microsoft. And so that doesn’t mean we go do things that are unnatural. We want us to do what is really our job, which is to build great games, build great hardware, but we’ve got to do it in an economically sustainable way. So, I think Asha is really, 100 days in, and she put out a post saying in the next 100 days, she’s going to take a fresh look and make sure we deliver on what our fans expect of us both on the hardware side or on the publishing side.”
