Microsoft is weighing a dramatic restructuring of its Xbox business, according to The Verge, including the possibility of spinning off the division entirely. The company has not ruled out the move, which would represent one of the most significant shifts in Xbox's roughly 25-year history inside Microsoft.
Alongside the potential spinoff, Microsoft is preparing to lay off a significant portion of its Xbox workforce. The cuts are part of a broader reevaluation of the division's direction and cost structure.
Also under scrutiny, according to The Verge, is Project Helix — Microsoft's next-generation console. The company is reconsidering its plans for the hardware, though no final decisions have been announced publicly.
Xbox has faced mounting pressure in recent years. Despite Microsoft's $69 billion acquisition of Activision Blizzard in 2023, the console business continues to trail Sony's PlayStation in hardware sales. Microsoft has increasingly leaned into Game Pass subscriptions and cloud gaming rather than competing on console units alone.
A spinoff would untether Xbox from Microsoft's core cloud and enterprise businesses, potentially giving the gaming division more flexibility — or exposing it to harsher market realities without a corporate safety net.
If Microsoft does spin off Xbox, it would signal that even tech giants are willing to shed beloved consumer brands when the numbers no longer work — a warning to the broader gaming industry that no division is too iconic to cut loose.