Microsoft is reportedly considering a significant change to Xbox’s corporate structure while also accelerating work on some of the gaming business’s biggest franchises, including Fallout and The Elder Scrolls.
According to The Information, Microsoft has not ruled out spinning Xbox out into a wholly owned subsidiary or forming a joint venture with other partners as the gaming unit continues its "reset" under new CEO Asham Sharma. The report said there are no immediate plans to restructure the business, but the option remains under consideration.
"Microsoft doesn’t have any imminent restructuring plans, but those options are on the table", The Information’s sources said. "Nadella and Hood haven’t ruled out restructuring Xbox’s relationship to Microsoft at some point in the future if doing so would make Xbox a more successful business, the people said."
The report said turning Xbox into a subsidiary would theoretically give the business more autonomy from Microsoft, allowing it to set its own budgets and strategies and potentially making it easier to sell off in the future. Microsoft already runs LinkedIn and GitHub as wholly owned subsidiaries.
At the same time, Microsoft CEO Satya Nadella and Chief Financial Officer Amy Hood have reportedly approved Sharma’s plan to increase spending on top-tier games in the coming fiscal year beginning in July. Xbox is said to be planning to "move faster" on new entries in Halo, Fallout, and The Elder Scrolls, with Sharma reportedly especially interested in the latter two series.
Bethesda has not released new mainline Fallout or Elder Scrolls games in over a decade, according to the report. The article said that delay is likely a frustration to its parent company, particularly given the popularity of the Fallout Amazon show.
There was also a recent update on The Elder Scrolls 6. Last weekend, Xbox’s games boss said he had seen the game running and that it "looks amazing", nearly exactly eight years after it was first announced.
The report arrives amid a difficult stretch of news for Xbox. Recent claims have suggested the company could be preparing to close one of its game studios as part of significant cuts reportedly expected next month.
On Wednesday, Xbox CEO Asha Sharma published a note sent to staff outlining what she called "realities that we need to navigate". In that message, she said annual revenue has declined nearly half a billion in five years, hardware costs are up 4x since last year, and the studio system is "overextended".
Taken together, the reported restructuring talks and push to speed up marquee game development point to a pivotal moment for Xbox as Microsoft weighs how to make the business more successful.
