Microsoft considered spinning out Xbox unit

Microsoft is reportedly exploring significant strategic options for its Xbox gaming division, including a potential spinoff, restructuring it as a wholly owned subsidiary, or forming a joint venture with external partners. These considerations are part of a broader effort to overhaul the unit, which could ultimately facilitate its sale.

Sources familiar with the discussions told The Information that while no immediate restructuring is imminent, all these possibilities remain on the table. Microsoft did not immediately respond to requests for comment.

Xbox has faced challenges in recent years, with its subscription and cloud gaming strategies not fully offsetting declining console sales and a lack of major new game releases. The unit's CEO, Asha Sharma, plans to increase spending on developing new titles from successful franchises like "Halo" and "Fallout." Microsoft CEO Satya Nadella and finance chief Amy Hood have approved this plan for the upcoming fiscal year, though the budget is not yet finalized.

This news follows a separate report from Bloomberg News indicating that Xbox is planning significant layoffs and budget cuts next month, marking the first major restructuring under Sharma.