Xbox CEO Asha Sharma rejects sale rumors, confirms massive restructuring

Key points

• Asha Sharma, who took over Xbox in February, denied sale rumors in a New York Times interview, stating the division is not for sale.
• Microsoft is planning to lay off up to 3,200 Xbox employees over the 2027 financial year as part of a major restructuring.
• The restructuring includes transferring the Halo franchise and Rare to Activision, and proposing the closure of Ninja Theory.
• Xbox Game Pass subscriber numbers peaked at 34 million before declining, prompting Microsoft to pull back on new Call of Duty releases for the service.
• Microsoft CEO Satya Nadella has supported Sharma's restructuring plans, describing them as necessary for a 'sustainable business model'.

Background

This development follows earlier speculation in June 2026 that Microsoft CEO Satya Nadella and CFO Amy Hood were considering spinning out Xbox entirely. The current restructuring, which Sharma announced in June, is part of a broader effort to streamline the division and improve its financial performance, which currently accounts for about 6% of Microsoft's total profits.

How outlets are covering it

GamesIndustry.biz and The Verge both report on Sharma's denial of sale rumors, citing her New York Times interview. The Verge provides additional context on the potential spinoff plans considered by Nadella and Hood, while GamesIndustry.biz focuses on the specific restructuring actions, including layoffs and studio closures. Windows Central questions the prevalence of the 'sell off' narrative, suggesting the current focus is on internal restructuring rather than divestment. All sources agree that Microsoft is pursuing a long-term strategy for Xbox, but they differ in the emphasis on the scale of layoffs and the specific franchises being transferred.

Why it matters

The denial of sale rumors is significant because it clarifies Microsoft's strategic direction for its gaming division, which has been a major focus of the company's growth. The restructuring and layoffs indicate a shift toward a more sustainable business model, which could impact the future of major franchises and the overall gaming industry. The decline in Game Pass subscribers and the transfer of key franchises to Activision suggest that Microsoft is reevaluating its approach to gaming, potentially affecting the competitive landscape and consumer expectations.

What to watch

Microsoft is expected to continue its restructuring efforts, including further layoffs and the consolidation of studios under Activision. The company will likely focus on expanding into new markets such as Africa, Latin America, and South Asia via cloud gaming. The long-term impact of these changes on Xbox's financial performance and market position will be closely monitored, as will the potential for future divestment or partnership deals.