Ethan Crossfield 
Microsoft’s Xbox division is undergoing one of its most significant organizational changes in years, with layoffs, studio realignments, and subscription strategy adjustments reshaping the business. Against that backdrop, speculation that Microsoft might sell or spin off Xbox has intensified. Xbox CEO Asha Sharma has now pushed back on the central rumor, saying the gaming division is not being prepared for sale while leaving open the possibility of partnerships and further operational changes.
Why Xbox Sale Speculation Gained Momentum
Reports in June 2026 said Microsoft had examined several ways to restructure its gaming operation. The possibilities reportedly included spinning Xbox off, creating it as a major wholly owned subsidiary, or forming a joint venture with outside partners. A subsidiary structure could theoretically make a future sale simpler, but the reporting did not establish that Microsoft had started a sale process or that a transaction was imminent.
The rumors arrived during a broad restructuring that has already included layoffs, studio divestitures, internal leadership changes, and adjustments to Xbox’s subscription strategy. Those moves made a potential sale easier to imagine from the outside, even though they did not confirm that Microsoft planned to leave the gaming business.
Asha Sharma Rules Out a Sale for Now
In an interview with The New York Times, Sharma directly rejected the idea that selling Xbox is her intended destination. Her comments indicate that Microsoft still views the division as part of its long-term business, rather than an asset currently being prepared for divestiture.
However, the statement does not mean Xbox’s structure is settled. Sharma said the company would consider suitable partnerships, a different operating model, and other steps needed to place the business on stronger financial footing. She did not explain which partnerships or organizational arrangements Microsoft might review.
Sharma became Xbox CEO in late February 2026 after taking over from Phil Spencer. She also emphasized that the revamped leadership team is thinking beyond immediate results and still has considerable work to do within Microsoft. The near-term target is a return to growth in fiscal 2027, which runs from July 2026 through June 2027. Microsoft CEO Satya Nadella has separately repeated that expectation.
Layoffs and Studio Changes Are Still Reshaping Xbox
The restructuring remains active as of the third quarter of 2026. In September, Microsoft announced 268 additional layoffs affecting Halo Studios, other first-party teams, and Xbox Game Studios management. The company said the wider process was approximately three-quarters complete.
Microsoft has also changed reporting lines across its portfolio. Obsidian Entertainment was placed under Bethesda, while Activision assumed greater responsibility for Halo. These decisions suggest that rejecting a sale does not rule out more internal changes. Xbox may remain inside Microsoft while continuing to consolidate teams, redistribute responsibilities, and examine how its studios operate.
What Comes Next for the Division
The available comments present Xbox as a business under pressure rather than one on the verge of collapse. Sharma said the division still reaches roughly 500 million monthly players, giving Microsoft a large base from which to pursue growth. Her stated focus is reaching more people while preparing the next generation of hardware, known internally as Project Helix.
That approach points toward a longer recovery effort rather than an immediate ownership change. Microsoft will still need to show that its restructuring can improve financial performance, clarify the roles of its studios, and support growth in fiscal 2027. For now, the company’s message is that Xbox is staying—but its internal shape is continuing to change.
Key points
- Asha Sharma says Microsoft is not preparing to sell Xbox.
- Microsoft may still consider partnerships or a different operating model.
- The restructuring is about three-quarters complete but remains active.
- Xbox is targeting growth in fiscal 2027 while developing Project Helix.
Expert View
For the wider games market, Sharma’s comments separate ownership from performance. Microsoft appears committed to keeping Xbox, but commitment will be judged by whether the division can turn its large player base and broad studio portfolio into sustainable growth. The continued layoffs and realignments may unsettle employees and communities, yet they also show that Microsoft is willing to make substantial changes without abandoning the platform. For players and studios, the most important signal is not a sale announcement but the possibility of more internal consolidation before the next-generation hardware and fiscal 2027 growth plans take shape.
