Microsoft is considering spinning off Xbox entirely as the division’s margins hit 3%
TL;DR
Microsoft may spin off, sell, or restructure Xbox after margins fell to 3%. Major layoffs planned for July. No decision is imminent.
Microsoft has not ruled out spinning off its Xbox division into a separate company. The Information reported that options under consideration include turning Xbox into a wholly owned subsidiary, forming a joint venture with outside partners, or selling the business outright. No decision is imminent, but new Xbox CEO Asha Sharma and Microsoft CEO Satya Nadella have left everything on the table.
The background is financial. Xbox’s profit margins collapsed to 3% this fiscal year. The division spent more than $20 billion on content, platform, and hardware subsidies over the past five years while annual revenue declined by nearly half a billion. Microsoft is also planning major layoffs in July, with significant cuts to marketing and other budgets.
Structuring Xbox as a subsidiary would mirror how Microsoft...
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