Who would be interested in buying Xbox if Microsoft decided to sell?

This week, Microsoft made significant cuts to its Xbox division, announcing the layoff of 1,600 employees now and another 1,600 in the upcoming fiscal year, alongside the closure of four studios. Xbox CEO Asha Sharma has been candid about the reasons behind these drastic measures, stating in a memo that the business is “not healthy” and acknowledging that “we simply spread ourselves too thin.”

With these sweeping changes and Xbox’s current focus on major titles, the future of the platform appears uncertain. As Microsoft channels much of its resources into AI initiatives, a struggling consumer business may not align with the company’s broader goals. This raises the possibility that Microsoft could be contemplating a complete exit from the gaming sector by selling off Xbox. This scenario prompts a larger question: who would be interested in acquiring Xbox?

While no official announcements have been made, Microsoft’s recent actions suggest that selling the brand could be a viable option, as noted by a market expert. “A wholesale divestiture of Xbox remains on the table, and it looks likelier given Xbox’s struggles with rising hardware costs and Microsoft’s focus on AI and infrastructure,” the expert explains. “It’s never been clear what role Xbox plays in Microsoft’s flywheel.” However, a full sale is considered the “less likely path,” as few potential buyers, even major players like Netflix or Amazon, would be inclined to take on an entire interactive-entertainment conglomerate generating over $23 billion in annual revenue.

Despite the layoffs, Microsoft still has a robust Xbox ecosystem. The company continues to sell its increasingly pricey Xbox Series X/S consoles, and one of Sharma’s first moves was to hint at the next-generation console, codenamed Project Helix. Xbox also boasts a vast array of game developers, including studios behind iconic franchises like Halo, Fallout, The Elder Scrolls, Minecraft, and Call of Duty, among others.

An industry analyst suggests that all options are on the table, given the drastic restructuring efforts underway. In the past, a company like Tencent might have considered a full acquisition, but it seems to be retreating from the gaming market, reportedly negotiating exits from various investments in Japan. Other major tech companies appear unlikely to step in; for instance, Meta has been scaling back its gaming ambitions, while Amazon is focusing on its Luna cloud gaming service.

Entertainment companies like Netflix and Disney could be potential buyers, but their gaming strategies have shifted away from major acquisitions in recent years. Netflix has been involved in gaming for some time but has recently let go of several high-profile indie titles and a AAA studio that never launched a game, opting instead for simpler mobile games.

The asking price for Xbox remains unknown, but it’s likely to be prohibitively high, especially when considering recent gaming megadeals. For instance, EA’s recent valuation stands at $55 billion, while Microsoft’s acquisition of Activision Blizzard was valued at $68.7 billion. The entire Xbox division, including its franchises, studios, and hardware, would likely command an even higher price.

The more plausible scenario is that major players might pursue “specific pieces” of the Xbox business. Analysts suggest that individual studios, intellectual properties, and teams could be sold off separately. Microsoft has already demonstrated a willingness to do this, allowing some studios to operate independently while selling others to undisclosed buyers.

Sharma has only been in her role for a short time, so the full impact of her decisions may take a while to unfold. Many of the remaining studios are centered around well-known franchises, indicating that Xbox is honing in on its most valuable properties. Sharma is also elevating the status of Mojang and King, emphasizing their importance as platforms with high monthly active users. She believes that Microsoft has underinvested in Minecraft and has appointed a former corporate VP of the franchise as Xbox’s first COO.

Opinions vary on when we might gain a clearer understanding of Xbox’s future direction. Some believe it could be by the end of the year, while others suggest it may take up to 24 months. What is evident is that the changes at Xbox are far from finished. As Microsoft seeks to allocate resources for its AI initiatives, scaling back or divesting parts of Xbox may become increasingly appealing.