- Could Microsoft sell Xbox amid the company’s biggest restructuring strategy yet?
- Analysts say Xbox as it stands would be too expensive even for some of the biggest buyers.
- It is suggested that big players would be more interested in buying “specific parts” of the business.
As Xbox undergoes its biggest restructuring yet and the seemingly endless stream of bad news for those involved continues, the gaming company’s future is uncertain.
While some question whether it would be in Microsoft’s best interest to sell the gaming company, industry analysts have suggested that the move would be a hugely costly endeavor for stakeholders, but it is possible that the Xbox we know could be dismantled piece by piece.
Microsoft’s major Xbox restructuring announcement, which Xbox CEO Asha Sharma called a “reset”, confirmed that thousands of employees were affected by layoffs, including 1,600 immediate job cuts and another 1,600 to come before the end of the current financial year.
The company has also laid off four studios, including Compulsion Games and Double Fine Productions, which are returning to independence, and Senúa and State of Decay 3 creators, Ninja Theory and Undead Labs, who are currently looking for new owners.
This new strategy comes after a year of struggles for Xbox, which has once again raised the prices of its consoles, canceled and closed several games and studios, and Sharma now admits that the company is “not healthy” in its current state, with Game Pass being a key failure.
“Our business today is not healthy,” Sharma said in an email sent to Xbox employees. “We are operating with margins that are 3 to 10 times lower than comparable platform and publishing businesses. We enter Generation 9 with a smaller install base and a higher cost structure. To grow, we are betting on Game Pass, cross-platform and a broader content portfolio. While those businesses have created significant value, they did not grow at the pace we expected.”
Before the recent turmoil, The Information (via PakGazette) reported that Sharma was looking to accelerate game development in The ancient scrolls, radioactive dustand Halo franchises and that Microsoft is considering options for its Xbox gaming unit, including a possible spinoff or restructuring as a wholly owned subsidiary.
While some believe the recent restructuring is a plan to make Xbox easier to sell, analysts have suggested to The Verge that there wouldn’t be many interested parties who would buy the entire business, mainly because it would be too expensive considering Xbox’s current portfolio.
“I think all options are on the table, considering the drastic measures already implemented to try to restructure the business on both a cyclical and structural level,” said Yoshio Osaki, president and CEO of market research firm IDG Intelligence.
Similarly, New York University professor Joost van Dreunen told The Verge: “An Xbox outright sale remains on the table, and appears more likely given Xbox’s struggles with rising hardware costs and Microsoft’s focus on artificial intelligence and infrastructure.”
He added: “It has never been clear what role Xbox plays in Microsoft’s steering wheel,” but an outright sale is the “least likely path” as there are few buyers, including giants like Netflix, Amazon and Tencent, who would want or allow “a complete interactive entertainment conglomerate exceeding $23 billion in annual revenue.”
Instead, Van Dreunen said the most likely scenario is that big players will look for “specific parts” of the business, and Osaki noted that “it’s possible that” individual studios, IPs and teams will be sold or spun off little by little.
Sharma revealed his vision for Xbox after taking over as CEO in January, saying he plans to return to the spirit the company was founded on, as well as reduce “the artificial divide between different types of devices.”
With the last part of its plan underway, which has notably dealt another crushing blow to Xbox-owned studios, it’s unclear at this point where the gaming giant is headed.
According to Osaki, the full vision will be clear “by the end of the year”, while van Dreunen believes it will be “within 24 months”.
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