Private equity firms explored $100-150B Xbox buyout as Microsoft's margin fell to 3%

Private equity firms explored buying Microsoft's Xbox division for $100-150 billion, per The Information. Talks never reached formal negotiations with Microsoft. "Xbox is not for sale," a Microsoft spokesperson said. The proposed valuation would exceed the $55 billion leveraged buyout of Electronic Arts.

Xbox revenue fell 7% to $21.8 billion in the fiscal year ended June.
Adjusted profit margin fell to 3% over the same period.
The division employs around 14,000 people across console, PC and publishing operations.
CEO Asha Sharma is cutting 3,200 jobs, 20% of staff, over the next year.

Insiders reportedly see Xbox being prepped for sale, spin-off or subsidiary conversion, per Fortune.
A high-level presentation on those scenarios followed Sharma's appointment as CEO.
"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," - Asha Sharma, Xbox CEO
Microsoft previously considered spinning Xbox into a wholly owned subsidiary, per earlier reporting.

The $100-150 billion range would surpass the $55 billion leveraged buyout of Electronic Arts.
Microsoft paid $68.7 billion for Activision Blizzard, completed in October 2023.
That acquisition added Call of Duty, World of Warcraft and Candy Crush to Xbox.
A private equity buyer would need to resolve which assets transfer in any sale.

Investors exploring a purchase does not mean Microsoft sought a buyer.
The reported range is not an agreed sale price.
Microsoft's stated position remains that Xbox is not for sale.

For Publishers & Developers: Add change-of-control termination rights to new Xbox publishing and Game Pass contracts.
For Investors & VC: Underwrite gaming LBO models on franchise IP value, discounting console hardware economics.
For Service Vendors: Pitch outsourced co-dev capacity to Xbox franchise teams backfilling internal headcount gaps.