If Microsoft Sold Off Xbox, Who Would Even Buy It?

Thu, 09 Jul 2026 12:00:00 +0100

Microsoft this week delivered the deepest blow yet to its Xbox division, announcing plans to lay off 1,600 employees immediately and another 1,600 over the next fiscal year while shuttering four studios. The drastic restructuring has reignited speculation that the company could eventually sell off its gaming arm.

Xbox CEO Asha Sharma has been blunt about the rationale. In an internal memo, Sharma described the business as “not healthy,” and in an interview with Fortune, she acknowledged that Microsoft “simply spread ourselves too thin.”

The cuts are part of what the company is calling an Xbox “reset,” a strategic pivot that involves narrowing the division’s focus exclusively to blockbuster titles. Obsidian Entertainment is reportedly being redirected to work on Fallout instead of Avowed, while ZeniMax Media — one of Microsoft’s major studio acquisitions — laid off 158 workers in Texas alone this week.

The Case for a Divestiture

With Microsoft pouring record investment into artificial intelligence and cloud infrastructure, analysts question how well a struggling consumer hardware business fits into the company’s long-term strategy. New York University professor Joost van Dreunen told The Verge that a “wholesale divestiture of Xbox remains on the table, and it looks likelier given Xbox’s struggles with rising hardware costs and Microsoft’s focus on AI and infrastructure.”

“It’s never been clear what role Xbox plays in Microsoft’s flywheel,” van Dreunen added.

The question, however, is who could realistically buy Xbox. The division generates more than $23 billion in annual revenue and encompasses hardware manufacturing, game publishing, dozens of studios (including Activision Blizzard, Bethesda, and Obsidian), and the Xbox Game Pass subscription service.

Who Would Buy?

According to van Dreunen, a full sale is the “less likely path.” Few potential buyers — even tech giants like Amazon, Netflix, or Tencent — would want to take on an entire interactive entertainment conglomerate of that scale. A sovereign wealth fund might have the capital, but would lack the operational expertise to run a global gaming business.

The more probable scenario, analysts suggest, is a piecemeal sale. Microsoft could divest individual studios, license its IP catalog, or spin off Xbox hardware while retaining Game Pass as a software service. This would align with the company’s broader strategy of focusing on high-margin software, cloud, and AI businesses.

A Bleak Week for Xbox

The layoffs and closures represent the most aggressive cost-cutting in Xbox history. Beyond the headline numbers, Obsidian Entertainment shed roughly 25 percent of its staff, and the studio pivot to Fallout signals a shift away from original IP toward established franchises.

For Microsoft, the calculus is clear: every dollar spent on Xbox hardware and mid-tier game development is a dollar not spent on AI data centers and Copilot infrastructure. As the company’s market capitalization increasingly depends on its AI narrative, the consumer gaming business — once a crown jewel — looks more like a distraction.

Whether Xbox survives as a Microsoft-owned entity or finds new owners in parts, the reset marks the end of an era for one of gaming’s most recognizable brands.

Days After Laying Off 3,200, Xbox CEO Asha Sharma Tapped to Advise Federal Reserve on Jobs

Thu, 09 Jul 2026 00:00:00 +0000

The U.S. Federal Reserve has announced the industry leaders who will helm its various monetary policy task forces — and one appointment is raising eyebrows across the tech and gaming industries.

Asha Sharma, the newly appointed CEO of Xbox, has been named to the Fed’s productivity and jobs advisory team just days after she announced the layoff of 3,200 employees across Microsoft’s gaming studios. The group’s mandate: “Assess the economic impact of new general-purpose technologies, including artificial intelligence, to inform the Federal Reserve’s policy judgments.”

A Controversial Appointment

Sharma’s appointment comes at a particularly awkward moment. After moving from Microsoft’s Core AI group to lead Xbox earlier this year, her first months at the helm have been marked by difficult decisions. She oversaw another price hike for Xbox gaming hardware and, most notably, announced the elimination of 3,200 roles across Microsoft’s gaming divisions — the latest in a prolonged series of staff reductions that have reshaped the company.

While Microsoft has been steadily cutting staff across multiple divisions for some time, the timing of the Fed appointment so close to the mass layoff announcement has drawn sharp scrutiny. The gaming industry as a whole continues to struggle with widespread job losses, making the optics of a gaming CEO advising the central bank on employment particularly fraught.

The Advisory Trio

Sharma is not the only eyebrow-raising pick. She joins Marc Andreessen, the venture capitalist and Netscape co-founder who has a checkered track record when it comes to thoughtful commentary on artificial intelligence. Andreessen has been a vocal proponent of rapid AI development and has made controversial statements about the technology’s impact on labor markets.

The third member of the panel is Charles I. Jones, a Stanford University economics professor currently on leave to work at the Anthropic Institute. Of the three, Jones brings the most directly relevant academic credentials to the question of how new technologies reshape labor markets and productivity.

What’s at Stake

The Federal Reserve’s task force is tasked with informing some of the most consequential policy decisions the central bank will make in the coming years. Understanding how AI and general-purpose technologies affect employment, wage growth, and productivity is critical for setting interest rates and monetary policy.

Critics argue that the composition of the panel — featuring a gaming CEO who just cut thousands of jobs and a venture capitalist known for dismissing AI safety concerns — may not inspire confidence in the Fed’s ability to take a balanced view of technology’s impact on American workers.

The gaming industry, meanwhile, continues to navigate a brutal cycle of layoffs and studio closures even as revenues remain high. Industry watchers will be watching closely to see whether Sharma’s role on the Fed panel signals anything about how Microsoft’s gaming leadership views the relationship between AI adoption and workforce reductions — or whether it’s simply a case of unfortunate timing.

Source: Engadget

Asha Sharma on Know the Tech