'Xbox Is Not for Sale': Asha Sharma Rejects Spinoff Talk as Microsoft Resets Gaming

Monday, October 5, 2026 — The question has been hanging over Xbox for years, and it got louder with every layoff notice: is Microsoft quietly getting out of the game business? In a New York Times profile published October 1, Xbox CEO Asha Sharma gave the bluntest answer anyone at the company has offered. "Xbox is not for sale," she said. "We will do whatever it takes to set the company up for success, and we will look at the right partnerships, the right operating model and everything needed to achieve that."

It's a denial — but it's also a mission statement. Sharma, 38, took over in February after Phil Spencer's exit, with no prior games-industry experience: her background was product leadership in Microsoft's CoreAI group and a COO stint at Instacart. She inherited a division she herself told employees in July was "not healthy," and has spent the months since tearing it down to the studs. The Times interviewer called her answer on a sale a "bob and weave" — the denial of a sale is firm, but everything about how Xbox operates is being rebuilt. "We've got a long way to go with Microsoft," she said, "and we're going to take the long-term view."

Why the question keeps coming up

The spinoff talk didn't start as idle gossip. In June, The Information reported that Microsoft's leadership had genuinely weighed restructuring Xbox as a subsidiary, a joint venture, or an independent spinoff — options that would strip the expensive, hit-driven gaming business off Microsoft's books and flatter the rest of the company's financials. The division has always been an awkward fit inside Microsoft, where cloud computing and AI dwarf it despite the $68.7 billion Activision Blizzard acquisition. And the restructuring optics have done nothing to calm the talk: mass layoffs, studio closures and sales, a shifting strategy that puts former exclusives on rival platforms. To an outsider, a company streamlining itself for a sale and a company streamlining itself to survive look identical.

What changed, per the Times and subsequent reporting, is that the separation camp lost. In early September, Nadella and CFO Amy Hood backed Sharma's overhaul plan over any separation option, and Nadella has since said publicly that he expects Xbox to return to growth by the end of fiscal 2027 — praising Sharma's "streamlining" as "great to see" while stressing that the division has to find a sustainable business model.

The reset, by the numbers

The restructuring Sharma is defending is the most aggressive in Xbox history. In a July 6 staff memo that she also posted publicly, she announced plans to cut roughly 3,200 jobs through Microsoft's 2027 fiscal year (which ends next June) — about a fifth of the division's staff this summer alone, with roughly a quarter of the cuts still to come, per Tech Times. The latest wave, in September, eliminated 268 more roles.

The org chart has been redrawn around the layoffs. Development of the next mainline Halo game moved from Halo Studios to a dedicated new team inside Activision, separate from that studio's Call of Duty operation — Halo Studios itself has been reduced to roughly 20 staffers tending existing games and the community, per Tech Times, with Activision president Rob Kostich saying the goal is to "make the greatest Halo game ever." Obsidian now sits under Bethesda; Rare and World's Edge moved under Activision. And last month, Xbox began layoffs at Ninja Theory as it moves to close the Hellblade studio — our full report on that is here, and it remains the human cost the reset's defenders prefer not to dwell on.

A smaller business than the noise suggests

One of the profile's most clarifying numbers: Xbox accounts for about 6% of Microsoft's total profits, per the Times. It's a rounding error next to Azure — which is exactly why the spinoff talk keeps resurfacing. But Sharma's counter-number is the reach: roughly 500 million monthly players across console, PC, and cloud, with ambitions to expand into Africa, Latin America, and South Asia through cloud gaming. The argument she's making to Nadella is scale, not margin: a half-billion-player platform that Microsoft owns outright is worth fixing, not selling.

The weak spot in that argument is Game Pass. Subscriber numbers peaked around 34 million and have been declining, per reporting on the profile — the subscription that was supposed to be gaming's Netflix hasn't hit its targets, and Microsoft has been retreating on the service's boldest bets, including pulling day-one Call of Duty releases over fears they were cannibalizing standalone sales. Our October Game Pass guide has what's actually on the service this month, but the strategic question is bigger than any one month's lineup: can a subscription model ever carry a division this expensive?

Tomorrow is the test

Which is why the timing of the profile matters. Tomorrow, October 6, Gears of War: E-Day launches on Xbox Series X/S and PC — day one on Game Pass, the best-reviewed mainline Gears since Gears of War 3, and the first flagship launch of the Sharma era. It's the proof of concept for everything she's described: a big, confident, first-party game that justifies the subscription it debuts on. Our launch-day story has the full context on what this one means for The Coalition and for Xbox.

Sharma's "not for sale" line will be remembered as the headline of this profile. But the more important line might be the one about the long view. Xbox is about to find out whether Microsoft's patience extends past the next earnings call — and whether half a billion players are a foundation or just an audience watching the reset happen to someone else's games.