It is hard to even wrap your head around this: Microsoft, which can draw on almost unlimited money thanks to Windows and Office, could sell off its gaming division.

On the 25th anniversary of its founding, Xbox finds itself in a desperate fight for survival, while its parent company, Microsoft, weighs every possible scenario, including a sale. The arrival of new CEO Asha Sharma has already brought numerous major changes in her first 100 days, and this week she indicated that a full reset of the Xbox division is needed to offset its meager 3% margin, including reportedly planned layoffs at the end of the month, which we have already covered in the news. However, according to The Information, Microsoft leadership has its own plans for Xbox. The site cites three sources who say Microsoft is considering structural changes within the Xbox division as part of a broader transformation.

The options under consideration include spinning off Xbox as a separate unit, turning it into a wholly owned subsidiary, similar to how Microsoft operates LinkedIn and GitHub, which would make a sale easier, or creating a joint venture with external partners. No decision appears imminent, but the possibilities are being actively considered, and neither CEO Satya Nadella nor CFO Amy Hood has ruled them out. The first option was actually raised earlier this year by Alinea Analytics analyst Rhys Elliott as an interesting possibility that would allow Xbox to flourish without Microsoft’s heavy influence.

On the games side, Nadella and Hood have approved plans to increase spending on first-party premium, meaning paid, titles in the fiscal year beginning in July, with particular attention paid to major franchises such as Halo, Fallout, and The Elder Scrolls. Sharma highlighted the latter two as especially important priorities, something she also publicly hinted at in her memo, saying they are fortunate stewards of industry-defining franchises with huge potential and player demand, but that these franchises have not been funded properly enough to compete and win. This lines up with speculation that Compulsion Games and/or Double Fine, whose recent games, South of Midnight, Keeper, and Kiln, underperformed, could end up on the chopping block. If that happens, hopefully they will be sold to another publisher or allowed to become independent instead of being shut down.

Microsoft may be taking a significant loss on every console sold because of memory prices, but we will return to that topic later in today’s news.

Source: WCCFTech, The Information