Over the years, numerous people have suggested Xbox might be better suited as a standalone company rather than being a division of Microsoft, and now another person has shared that view.
Rhys Elliott of Alinea Analytics wrote that the “most logical long-term move” for Microsoft would be to spin off Xbox. He said Xbox has “some of the most valuable IP in the business” under its belt, including Xbox franchises and titles from subsidiaries like Activision and Bethesda.
Elliott–an industry analyst known for his insightful and opinionated takes–pointed out that gaming, as a business, has lower profit margins than some of Microsoft’s other business areas, and a standalone version of Xbox could be “free from the burden of matching the ROI of Azure or the ubiquity of Windows.”
“It could return to its roots as a scrappier, game-focused competitor,” Elliott said.
He added that Microsoft Gaming’s new CEO, Asha Sharma, might be the right person to help steer Xbox through such a move to help “truly reclaim its 25-year legacy.”
“[Xbox] needs to stop being a footnote for Satya Nadella and become something of its own,” he said. “It’s big enough. The best pathway forward, in my eyes, is to set Xbox free. Not by euthanizing it, but by spinning it off.”
He added: “Gaming is in a better place with a strong, independent Xbox.”
Regarding his “euthanizing” comment, that’s a reference to what Xbox co-founder Seamus Blackley said recently when he discussed how Sharma’s job will be to be a “palliative care doctor who slides Xbox gently into the night.”
Elliott said it’s not likely that Xbox would be spun off soon, so for now, he said people should “give Sharma a shot” at running the Xbox business. He said he hopes she takes cues from Take-Two boss Strauss Zelnick, who is also not a big gamer but understands the business of games. Elliott pointed to a quote from a CNBC interview in which Zelnick said, “I do not play video games. My role is to attract, maintain, and motivate the best talent in the business, and then get out of the way.”
Calls to spin off Xbox are nothing new
Perhaps the highest-profile example of a call to spin off Xbox came from Microsoft co-founder Paul Allen. His investment firm called on Microsoft to spin off Xbox many years ago, saying both Microsoft and Xbox would be better suited as separate companies.
Former Microsoft executive Stephen Elop, when he was reportedly a candidate to become the next CEO, was reported to have been interested in selling off Xbox if he got the job. Current Microsoft CEO Satya Nadella reportedly considering killing off Xbox entirely, but that did not happen, of course.
In her role as Microsoft Gaming CEO, Sharma has said she wants to return Xbox to its “roots,” but it remains to be seen what that means. She also said she’s aware that fans want Xbox-exclusive games.
Monday, February 23 was Sharma’s first day as the new boss, so it’s obviously super early days and we do not yet know how she plans to run Xbox any differently than the previous boss, Phil Spencer. He’s staying on with Microsoft through the summer in an advisory role to help with the handoff to Sharma.
Another big shakeup at Xbox is the departure of Xbox president Sarah Bond and the promotion of Matt Booty to chief content officer. Bond was reported to have been difficult to work with.
