Private equity reportedly explored a $150 billion Xbox buyout

Private equity firms considered values of $100 billion to $150 billion for Microsoft's Xbox division, according to The Information, but the exploratory talks never reached negotiations with Microsoft.

A Microsoft spokesperson said in a statement: “Xbox is not for sale”. That leaves the reported approach without a transaction. For studios and publishers, the approach changes no ownership: Microsoft still controls Xbox, Activision Blizzard and Mojang.

Microsoft’s 2023 acquisition of Activision Blizzard sits inside that unchanged structure. The Information’s report also put the potential valuation above the $55 billion leveraged buyout of Electronic Arts. That sets the scale of the asset on paper, not its saleability.

What do Microsoft’s numbers say about Xbox?

Revenue fell 7% to $21.8 billion in the fiscal year ending in June, and adjusted profit margin fell to 3% as of June, according to figures disclosed by Microsoft. The Xbox division employs around 14,000 people.

Those figures make the announced cost and franchise plans more consequential than the takeover speculation. A shrinking revenue base and a 3% adjusted profit margin leave little cushion for error. For studios and internal teams, the next operating year is where improvement must show up.

What changes for Xbox’s 14,000 people?

CEO Asha Sharma, who took over the division in February, has focused on improving operations and growth. In July, she outlined plans to cut 3,200 jobs, around 20% of staff, over the next year, while investing more in franchises such as Halo and Minecraft.

The staffing plan is the immediate operational change: roughly one in five staff over the coming year. It also sits alongside more franchise investment. Neither measure changes the ownership answer; the spokesperson’s categorical statement points the other way. Teams inside Xbox face a restructuring timetable, not a handover schedule.

Microsoft has also considered spinning out Xbox or restructuring it as a wholly owned subsidiary, according to earlier reporting. However, the company has continued to focus on improving the division with new Xbox initiatives.

Which new units sit behind the franchise push?

Earlier this month, Microsoft introduced Xbox Labs, a group exploring new gaming technology. XP was also announced as a division focused on expanding franchises through film, television, merchandise and live experiences.

Microsoft appointed Kayleen Walters to lead XP and Maria Angelidou-Smith as CEO of Mojang and Minecraft. Together, the appointments support the company’s aim of growing major franchises and finding new ways to reach audiences.

For Xbox’s studios and publishing partners, the current plan is continued investment in Halo and Minecraft, alongside adjacent film, television, merchandise and live-experience work. No sale has been agreed, and no new corporate owner has entered the process.

The next year of execution, not a $150 billion bid, is the useful test: whether Microsoft can arrest the 7% revenue decline and rebuild its 3% adjusted profit margin while carrying out the 3,200-job reduction. The next results and that restructuring timetable are the signals worth watching.