Microsoft is exploring several strategic options for its Xbox gaming division, including the possibility of spinning it off or reorganizing it as a wholly owned subsidiary, according to a report by The Information citing three sources familiar with the matter.
The company is also evaluating alternatives such as forming a joint venture with external partners as part of a broader effort to revamp the business. Such changes could potentially make the gaming unit easier to divest in the future, the report added.
Xbox has faced challenges in recent years, with Microsoft's investments in subscription services and cloud gaming failing to fully counter slowing console sales and a limited pipeline of major game releases.
Although no immediate restructuring plans are in place, the report said all options remain under consideration.
Microsoft already operates LinkedIn and GitHub as independent, wholly owned subsidiaries, a structure that could serve as a model for any future Xbox reorganization.
The report also said that Asha Sharma, who became head of the gaming division in February, intends to boost investment in game development to speed up work on key franchises such as Halo, Fallout, and The Elder Scrolls.
The report is the latest in a growing wave of speculation surrounding Xbox's future. Recent rumours have suggested the gaming division could face substantial budget reductions and a significant round of layoffs as part of a broader restructuring effort led by Sharma.
The proposed overhaul is said to include maintaining Gears of War: E-Day as an Xbox console exclusive, a move aimed at reconnecting with the brand's core audience and strengthening the platform's appeal.
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