Microsoft has reportedly looked at spinning off Xbox

Microsoft has reportedly considered spinning off Xbox as a separate company, restructuring it as a wholly owned subsidiary, or setting up a joint venture with outside partners. The report comes from The Information, via Reuters, and frames those moves as options Microsoft has discussed, not a finalized plan.

The same report says Microsoft CEO Satya Nadella and CFO Amy Hood have approved a proposal from newly appointed Xbox boss Asha Sharma to increase spending and speed up development on major franchises, including Halo, Fallout, and The Elder Scrolls. That budget reportedly hasn’t been finalized yet, so the details could still change.

Sharma recently marked her first 100 days leading Xbox with an official blog post saying Microsoft has spent more than $20 billion on Xbox over the last five years, excluding Activision Blizzard. She also said Xbox revenue has dropped by about $500 million per year.

The wider message from Microsoft leadership is that Xbox needs to become more financially sustainable. Nadella recently said the company has invested heavily in gaming for 25 years, but now has to find a way to make Xbox work economically while still making games and hardware.

Nothing in the report means Xbox is being sold right now. But it does point to Microsoft actively weighing bigger structural changes for its gaming business, at a time when Xbox is under pressure to cut costs, improve returns, and make its massive slate of studios pay off.