Microsoft's Xbox Division Faces Profit Slump, Restructuring on the Table
Microsoft is reportedly weighing options to restructure its Xbox gaming division amid declining profit margins. The company's leadership, led by CEO Satya Nadella and CFO Amy Hood, are considering spinning off or restructuring the division into a wholly-owned subsidiary, joint venture, or separate entity.
Xbox Chief Executive Asha Sharma is spearheading a strategic pivot to revive profitability, which includes aggressive cost-cutting measures such as layoffs and budget reductions across underperforming studios. The internal turnaround plan aims to address stagnant global console spending and escalating manufacturing costs, with Xbox's profit margins plummeting to just 3% this fiscal year.
Sharma has informed deputies that the division must publish new Halo games on a significantly faster timeline, while additional resources will be allocated to Minecraft to help the title recover ground lost to competitors like Roblox. The move is part of an increased game-development budget for the upcoming fiscal year starting in July.