Microsoft has launched XP, a new Xbox division dedicated to extending its gaming franchises into film, television, merchandise, live events and brand partnerships, and appointed former Mojang lead Kayleen Walters as its president.

The move formalises work that previously sat across multiple internal groups. XP will operate four units:

• Xbox Pictures — film and television development
• Xbox Products — consumer merchandise
• Xbox Places — live events, attractions and themed locations
• Xbox Partnerships — collaborations with creators, brands and communities

Xbox said games will remain at the centre of its franchises, with XP working alongside its internal studios and external partners rather than replacing studio output. The framing positions the division as a commercialisation layer stacked on top of the existing first-party portfolio.

What record is Walters bringing to the role?

Walters spent 13 years at Lucasfilm before joining Mojang Studios. During her tenure, Minecraft's installed base grew from 350 million units to more than 425 million, and the franchise's merchandising business became one of the world's top 20 by sales.

She also served as executive producer of A Minecraft Movie, which recorded the biggest opening weekend for any video game adaptation and finished first at the US box office. Mojang secured its first theme park placements under her watch, providing a working template for the Xbox Places remit.

"Kayleen understands that the strongest franchises grow by remaining true to what and who made them special while creating new ways for fans, creators, partners, and communities to participate," Xbox chief strategy officer Matthew Ball said. "I cannot imagine a better leader for this division and we are just getting started imagining what it will build."

How does XP fit into Xbox's broader restructuring?

The launch comes during a sustained reset at Microsoft Gaming. Xbox announced plans last month to cut 268 roles as part of ongoing consolidation, on top of 1,600 jobs eliminated in July. Microsoft has not disclosed XP's headcount or how the new division's consumer-products focus will interact with the studio rationalisation.

Walters will report into the Xbox leadership structure, and the company has framed XP as complementary to first-party development. That distinction matters as the platform holder continues to defend content investment after the recent layoffs, with studio leadership under pressure to show that franchise extension translates back into game funding.

What should studios and partners watch next?

The first operational test for XP is whether Xbox Pictures can deliver a slate of adaptations beyond the Minecraft property. A Minecraft Movie established the precedent; the open question is throughput. Xbox Places presents a longer lead-time bet, given the multi-year development cycles typical of theme-park integrations and the cost-sharing models that govern those deals.

The wider Xbox first-party catalogue remains available for transmedia extension. The division's early hires, partnership announcements and licensing terms will set the template for how aggressively Xbox pursues franchise monetisation outside of games.

Microsoft's next quarterly earnings will offer the first opportunity for management to outline how XP factors into content, licensing and merchandise guidance. Studios evaluating whether to keep transmedia operations in-house or hand them to a platform-level partner will read the division's early disclosures as the operative market signal.