Published on 6/16/2026
Microsoft is considering abandoning the Xbox sector, which it spent 25 years supporting instead of making a profit from it, as part of an expanded plan to restructure the sector led by its new president, Asha Sharma. This plan may lead to the disappearance of the Xbox we know and its transformation into a game publishing company instead of a company that manufactures gaming platforms.
Microsoft CEO Satya Nadella explained that the company has invested in Xbox over the past years without making real profits from it, and added with a laugh: “Xbox games make more profit on YouTube than what happens with Microsoft,” according to a report by the American technical website GeekWire.
Nadella’s statements coincide with the start of layoffs in the platform’s studios, as a Bloomberg report reveals the closure of 3 major studios: “Compulsion Games”, which is responsible for developing the “South of Midnight” game, “Double Fine”, which is responsible for developing the famous “Psychonauts” series, and “Ninja Theory”, which is responsible for developing… The Hellblade: Senua series of games, which recently announced a new part to the series during Summer Game Fest.
But why is this happening on Xbox now?
Numbers don’t lie
The Game Industry Biz report (GamesIndustry.biz) reveals a commercial crisis facing the Xbox sector, as the company spent $20 billion on the sector during the past five years, but its profits declined by about $500 million annually for the same period, without considering the Activision Blizzard deal, which is one of the largest acquisition deals in the world of gaming.
These results reinforce Nadella’s point of view that YouTube makes more money from broadcasting games and displaying ads in them than Microsoft itself.
This prompted Microsoft management to try to find innovative solutions that enhance the sector’s performance, including approving a plan to increase spending on successful game series on the platform, such as “Halo,” “Fallout,” and “The Elder Scroll,” to try to compensate for the loss.
The company also intends to close its studios and significantly reduce its workers in order to reduce its expenses in general, according to what was stated in the report.
A separate report from Bloomberg confirms that the decision to close these studios is not yet final, as the studio could buy itself from Microsoft and become an independent studio instead of being affiliated with the company.
Why did Xbox come to this?
Nadella believes that the reason that brought the platform to where it is now is mainly due to the business model that Xbox is trying to adopt, adding that they need to look for a way to make games economically feasible for the customer and the company at the same time.
In a related context, a report from the American technical website GamingBible places blame on the Activision Blizzard deal because of its size and the pressure that followed it, as the company intended to benefit from the profits of Activision games to compensate for the losses of the entire sector, which did not happen due to the sales of “Call of Duty: Black Ops 6” and what followed.
The reason for this is that the games were released on the first day directly within the Game Pass service, so users did not need to purchase the games separately, and preferred to use them within their subscriptions.
Consequently, Microsoft decided to raise the subscription price without directly providing new services, which prompted many players to completely cancel their subscription to Game Pass, causing more losses, according to the site’s report.
Is Xbox sold?
Xbox management, represented by Sharma, began taking a set of steps that would completely determine the future of the platform and its business model, as Microsoft management approved the next hundred-day plan that Sharma had previously set.
This plan includes an extensive layoff that includes the management of Xbox itself and its affiliated studios, as well as increased investment in the huge games that generate sales for the company.
This plan gives Microsoft’s management enough time to be able to make the final decision regarding the future of Xbox forever, as Microsoft stands before a wide range of options.
These options include the possibility of separating “Xbox” as an independent company with its own management and budget, or converting it into a joint venture between “Microsoft” and its partners such as “Lenovo” and “Asus,” or even selling it, although the company does not yet have potential buyers and no negotiations have been conducted on this matter, according to the Game Industry Biz report.
Although these options seem different on the surface, they have one result, which is that the form of Xbox and players’ relationship with it will completely change and move from the experience of traditional gaming platforms to something else.
It should be noted that the transformation of “Xbox” into a joint project between Microsoft and its partners makes the platform closer to a logo and a software interface that any company can install on its devices, and this means that “Xbox” is turning into something similar to operating systems intended for games.
Microsoft has already done something similar to this in portable gaming platforms that use the Windows system. Some of them carry the Xbox logo and come with an interface that mimics the platform’s interface to play games.
This step achieved unexpected success for Microsoft and the companies that cooperated with it, and the “Gaming Business” website report states that sales of portable platforms bearing the “Xbox” logo exceeded their initial expectations.
Direct impact on players
While there seems to be talk about the administrative future of Xbox, whether it is affiliated with Microsoft or has become a separate company away from the players, its effects will extend directly to them, for several reasons, starting with the volume of spending on the platform and its ability to innovate and compete, and even the impact of its absence from the scene.
Although there are many options for Xbox, all of them, in one way or another, include the absence of Microsoft and the support it provides to the platform, which will greatly weaken the platform, especially since its biggest competitor is supported by another huge company, the Japanese “Sony”.
It can be said that the greatest impact of Xbox’s future plans is its absence from the scene, leaving it completely under the control of PlayStation, which will set its own terms and laws and force players and game companies to comply with them, because the intense competition between companies is always in the interest of the consumer in the end.
