Microsoft Gaming
Microsoft Gaming is the video game and digital entertainment division of the American multinational technology company Microsoft, based in Redmond, Washington and established in 2022. Its five development and publishing labels consist of: Xbox Game Studios, Bethesda Softworks, Activision, Blizzard Entertainment, and King. It produces the Xbox video game consoles and services, in addition to overseeing production and sales, and is led by CEO Phil Spencer, who has overseen Xbox since 2014.
Prior to 2022, Microsoft had several different video game-related product lines, including Xbox hardware, Xbox operations, and game development studios. Microsoft Gaming was created with the announcement of Microsoft's plans to acquire Activision Blizzard to unify all of Microsoft's gaming groups within a single division. With the completion of the Activision Blizzard acquisition in 2023, Microsoft became one of the largest gaming companies, the third-by revenue and the largest by employment. The company has 500 million monthly active players across all gaming platforms.
The division owns intellectual property for some of the most popular, best-selling, and highest-grossing media franchises of all time, including Call of Duty, Candy Crush, Warcraft, Halo, Minecraft, and The Elder Scrolls.
History
Pre–Microsoft Gaming (2001–2021)
Up through 2000, Microsoft had only a limited number of video game publishing efforts. With the announcement of the first Xbox in 2000 and its release in 2001, Microsoft established a division for internal development of video games for the Xbox and Windows, then known as Microsoft Game Studios. The Xbox hardware remained a separate division within Microsoft. After Steve Ballmer's departure as Microsoft's CEO, Microsoft investors attempted to exert pressure on the company to either sell or shut down its gaming business. However, these efforts did not gain significant traction. Microsoft's gaming division, including products such as the Xbox console, has remained a strategic focus for the company. Under the leadership of Satya Nadella, who assumed the role of CEO in 2014, Microsoft has continued to invest in and expand its presence in the gaming market. Since 2009, Microsoft's games operations, including Xbox division, are located at Microsoft West Campus.MGS made a number of acquisitions of studios to help build out the Xbox software library over its first decade, including Bungie, Lionhead Studios, and Rare while establishing internal studios 343 Industries for Halo development and Turn 10 Studios for Forza games. In 2014 after Satya Nadella was promoted to CEO, Microsoft embarked on a new acquisition strategy, starting with the acquisition of Mojang Studios, the developer of Minecraft, for $2.5 billion. Between 2014 and 2019, MGS also acquired several high-profile studios, including Ninja Theory, Playground Games, Obsidian Entertainment and inXile Entertainment. These acquisitions were aimed to help position MGS as the company's premier first-party development house comparable to PlayStation Studios for Sony.
Microsoft launched Xbox Game Pass in 2017, marking a pivotal year in which the company reevaluated its strategy to focus on a service-based business model rather than exclusive titles. This strategic shift allowed Microsoft to distinguish itself from other console manufacturers. By prioritizing a service-oriented business model with the Xbox Game Pass, Microsoft differentiated its approach from traditional console strategies that often relied heavily on exclusive game titles to attract users. Instead of competing solely based on exclusive content, Microsoft aimed to offer a broader value proposition to gamers through a subscription service that provided access to a vast library of games. In 2017, Spencer was named Executive Vice President, Gaming at Microsoft.
In 2019, as part of a larger branding, MGS was renamed to Xbox Game Studios as to align with the Xbox hardware branding, and further acquired Double Fine. Microsoft acquired ZeniMax Media for $8.1 billion in 2020, the parent company of id Software, MachineGames, Arkane Studios, publisher Bethesda Softworks and others, to further expanding its portfolio of game development studios. ZeniMax remained a separate entity from XGS from its acquisition though overseen by Spencer.
Establishment and acquisition of Activision Blizzard (2022–2023)
Microsoft announced its proposed acquisition of Activision Blizzard for $68.7 billion in cash on January 18, 2022. Simultaneously, Microsoft announced that Xbox Game Studios, ZeniMax Media and Activision Blizzard will fall under Microsoft Gaming, Microsoft's newly formed gaming division. Microsoft Gaming CEO Phil Spencer stated that one of the primary reasons for acquiring Activision Blizzard is to enter the mobile gaming market. Meanwhile, Activision Blizzard CEO Bobby Kotick mentioned that they accepted the offer to access more talent, capitalize on the growing demand in the gaming industry, and to compete with rising gaming companies from China and Japan. Microsoft Gaming has entered into several 10-year agreements with gaming companies including Sony, Nintendo, Nvidia, Boosteroid, Ubitus, Nware, and EE to bring Call of Duty to their respective platforms over the next decade. Additionally, Microsoft Gaming sold Activision Blizzard's cloud gaming rights to Ubisoft for 15 years due to regulatory pressure from the acquisition of Activision Blizzard. After several regulatory challenges, the deal was closed on October 13, 2023. The total cost of the acquisition amounted to $75.4 billion. This made Microsoft the third largest publisher of video games after Tencent and Sony Interactive Entertainment. On the day the acquisition was announced, Phil Spencer formed the Microsoft Gaming business, taking over as CEO, while Matt Booty headed Xbox Game Studios. Spencer's role includes all Microsoft's global interactive entertainment business across all devices and services. In 2022, ZeniMax Media, acquired Nemesys Games, a Hungarian video game development studio. Following the acquisition, Nemesys Games was officially renamed to ZeniMax Online Studios Hungary.Shortly after completion of the Activision Blizzard acquisition, Microsoft further reorganized Microsoft Gaming. In this move, the Xbox hardware line was brought into Microsoft Gaming led by Sarah Bond. Matt Booty was made president of game content and studios, which includes oversight of Xbox Game Studios and ZeniMax Media, while Activision Blizzard also remained directly under Spencer, with Bobby Kotick remaining as CEO until the start of 2024 to help with the transition. In an email sent to employees, Bobby Kotick announced that he would leave the Activision Blizzard on December 29, 2023.
Following Bobby Kotick's departure, Activision Blizzard has undergone organizational changes to realign with Microsoft Gaming. Vice Chairman of Activision Blizzard, Thomas Tippl; President of Activision, Rob Kostich; President of Blizzard Entertainment, Mike Ybarra; and President of King, Tjodolf Sommestad, have begun reporting to Matt Booty, President of Game Content and Studios. The leadership teams at Activision, Blizzard Entertainment, and King remained unchanged. CCO Lulu Meservey departed Activision Blizzard on January 31, 2024. After assisting with the transition, Thomas Tippl, along with several other top Activision Blizzard executives, departed from the company in March 2024.
Microsoft Gaming laid off 1,900 staff in January 2024. Additionally, Blizzard's president Mike Ybarra and Blizzard's co-founder and chief design officer Allen Adham left the company. Blizzard Entertainment reportedly is the organization that is most affected by layoffs. Project Odyssey, a game that Blizzard Entertainment has reportedly been working on for six years, has been cancelled. Toys for Bob and Sledgehammer Games reportedly lost over 30% of their staff due to layoffs. Microsoft Gaming also reportedly laid off the entire internal customer support team of Activision Blizzard and the team dedicated to bringing Xbox games to physical retail. Johanna Faries, the former general manager of the Call of Duty franchise, officially took on the role of the new president of Blizzard Entertainment on January 29, 2024, commencing her position on February 5. Simultaneously, Matt Cox assumed the position of the new general manager of the Call of Duty franchise. In February, Toys for Bob's office closed, and employees will work remotely.
Multiplatform strategy (2024–present)
Rumors in early February 2024 suggested that Microsoft was looking to bring its first-party exclusives to either PlayStation 5 or Nintendo Switch, and that Microsoft may be leaving the hardware business. A special Official Xbox Podcast was held on February 15, 2024 with Spencer, Bond, and Booty, discussing that Microsoft Gaming was looking to release some of its first-party titles on other consoles. Spencer said that one of the reasons for this decision is to grow the Microsoft Gaming franchises, and he anticipates that in the next 5–10 years, console-exclusive games will be a smaller part of the gaming industry. In the months that followed, Spencer said that the gaming industry was undergoing changes in the methods by which games were developed and distributed, and that Microsoft was prepared to anticipate when considering a more aggressive multiplatform strategy. By the end of 2024, Microsoft Gaming launched a new advertising campaign titled "This is an Xbox", intent on showcasing the various compatible devices that can access Xbox games and services beyond the traditional consoles, such as Windows PCs, Samsung Smart TV sets, and streaming devices like Amazon Fire TV through cloud streaming. Xbox Senior Marketing Director Craig McNary stated that the campaign's message was to illustrate "the evolution of Xbox as a platform that extends across devices," thus being evocative of a future where their games and content are accessible on a variety of hardware and software. Spencer also said that Microsoft Gaming will support the Nintendo Switch 2 following that console's announcement in January 2025.First-party games that were launched for non-Xbox consoles during 2024 included Pentiment and Grounded for PlayStation 4, PlayStation 5 and Nintendo Switch, as well as Hi-Fi Rush and Sea of Thieves for PlayStation 5. Other games released for additional consoles during 2025 include PlayStation 5 ports of Age of Mythology: Retold, Indiana Jones and the Great Circle, ''Forza Horizon 5, Age of Empires II: Definitive Edition,, Senua's Saga: Hellblade II, Age of Empires IV, and Microsoft Flight Simulator 2024. Microsoft accelerated their strategy as an agnostic publisher throughout this year, as The Elder Scrolls IV: Oblivion Remastered, Doom: The Dark Ages, Tony Hawk's Pro Skater 3 + 4, Gears of War Reloaded, Ninja Gaiden 4, The Outer Worlds 2 and Fallout 4 - Anniversary Edition all launched on PlayStation 5 simultaneously with Xbox and PC, while Pro Skater 3 + 4 launched for both Nintendo Switch and Nintendo Switch 2. Microsoft's publishing strategy across multiple platforms will continue in 2026, including PlayStation 5 ports of South of Midnight, Forza Horizon 6, and Avowed, alongside Nintendo Switch 2 ports of South of Midnight, Indiana Jones and the Great Circle and Fallout 4 - Anniversary Edition as well as PlayStation VR2 support for Microsoft Flight Simulator 2024. In addition, Towerborne, Kiln, Halo: Campaign Evolved, and Fable are scheduled to launch day and date on PlayStation 5 with Xbox and PC. The Great Circle, which was initially planned as a console exclusive for Xbox Series X/S, was amended to include launches for other consoles following its Xbox and PC release in December 2024, which Spencer said resulted from the positive reception to the prior four Xbox titles released on other platforms in the earlier half of 2024, in addition to a need to maintain a strong business and interest in their franchises as they work to grow the Xbox ecosystem.
Other first-party games in Microsoft's portfolio, including Starfield, are not expected to retain platform exclusivity, as Spencer expressed that Microsoft Gaming desired to take games where new players could potentially be accumulated. Despite the shift to agnostic games publishing, Spencer maintained that Xbox hardware remains a key component of Microsoft's gaming business, and that they intended to compete on console features as opposed to exclusive software. Spencer elaborated on the strategy in February 2025, stating that due to player investment in libraries on other platforms, Microsoft was no longer attempting to move prospective users towards Xbox, instead concluding that multiplatform distribution enabled the publisher to build a better games portfolio. In January 2026, head of Xbox Game Studios Craig Duncan explained that multiple factors during development are considered when deciding which first-party games are made available on other consoles from launch, such as the resources available to studios and initial production plans not factoring other platforms, but that day-and-date release cadences for PlayStation and Nintendo versions of their titles would be more consistent going forward. Beginning with the Xbox Developer Direct in January 2025, Microsoft Gaming presentations advertised the availability of their first-party titles on PlayStation and Nintendo consoles.
Activision developer Toys for Bob left Microsoft on agreeable terms in February 2024 to become an independent studio, and signed a publishing agreement for their next title with Microsoft in May 2024.
On April 9, 2024, Microsoft Gaming and NetEase Games announced an agreement to bring Blizzard Entertainment games back to China. Previously, Blizzard terminated a publishing deal with NetEase in 2022. Microsoft Gaming also revealed plans to bolster their collaboration through a strategic partnership focused on expanding the availability of NetEase video games across various Microsoft Gaming platforms.
Microsoft Gaming shut down three development studios on May 7, 2024: Alpha Dog Games in Canada, Arkane Austin in the US, and Tango Gameworks in Japan. Additionally, Roundhouse Studios will merge with ZeniMax Online Studios in the US. According to Microsoft Gaming, this move is a part of a larger "reprioritization of titles and resources" that Microsoft's gaming division is carrying out. The intention is to boost investment in their library of games and new intellectual assets while focusing on high-impact titles. Some teams have been reassigned to other projects inside Bethesda and ZeniMax, and production on some games has stopped as a result of these companies closing.
Jerret West, Xbox's chief marketing officer, left Microsoft Gaming at the end of June 2024. West led the marketing efforts for the Xbox Series X/S consoles and his team was responsible for developing marketing plans for games, hardware, and Xbox Game Pass. Following his departure, Microsoft is reorganizing some of its marketing teams. A new, expanded central gaming marketing team is set to be created under Kirsten Ward, VP of Xbox integrated marketing. Consequently, games marketing would become a part of the game content and studios division led by Matt Booty, while Xbox marketing, led by Chris Lee, would move to the Xbox organization and report to Xbox president Sarah Bond.
On August 7, 2024, Krafton reached an agreement with Microsoft Gaming to acquire Tango Gameworks as well as the Hi-Fi Rush IP.
In September 2024, Spencer announced another round of layoffs affecting 650 staffers in "corporate and supporting functions" following the acquisition of Activision Blizzard. In an interview with Bloomberg News in November 2024, Phil Spencer expressed a desire to continue acquiring studios, specifically taking interest in Chinese developers and partnerships with mobile game publishers similar to their relationship with Tencent Games, whom they collaborated with to produce Age of Empires Mobile. Spencer also confirmed that the company was prototyping a possible handheld Xbox console, though stressed that "such a device is a few years out." Spencer commented on Microsoft Gaming's efforts to establish a first-party Xbox storefront for mobile devices amidst ongoing conflicts with platform holders such as Apple Inc. and Alphabet Inc., who respectively control the App Store and Google Play, saying that he envisions an environment where such companies are more open to hosting Xbox's content in co-existence with their marketplaces.
Microsoft Gaming introduced Muse, a world and human action generative artificial intelligence model trained to generate gameplay snippets and controller actions, developed by the Microsoft Research team in Cambridge, UK, in collaboration with Ninja Theory, in February 2025. Muse generates low-resolution gameplay clips and responds to real-time interactions, including controller actions and in-game elements like power cells. Microsoft demonstrated the technology using Ninja Theory's 2020 game Bleeding Edge. Nadella said that Microsoft plans to build Muse's engine from their library of games as well as testing games developed with help of Muse.
On May 1, 2025, Microsoft Gaming announced that video game prices will increase to $80 USD by the end of the year, marking the first major price hike since 2020. Later that month, a Windows Central report detailed that Microsoft had internally de-prioritized plans for their first-party Xbox handheld console, originally scheduled for 2027, to focus on improving the gaming performance on Windows 11 and leverage collaborations with third-party partners on Xbox-branded handheld PCs, such as "Project Keenan" developed by Asus. The Verge later reported in June that the first-party Xbox handheld had been canceled behind-the-scenes to allocate more resources towards further developing the Xbox software platform and third-party devices. The Asus project was revealed in the June 2025 Xbox Games Showcase as the ROG Xbox Ally and a higher-end model, the ROG Xbox Ally X, a pair of Xbox-branded variants for the existing Asus ROG Ally and ROG Ally X handheld PCs. Both units run on a custom version of Windows with support for Xbox Game Pass, Xbox Cloud, Remote Play, supported Play Anywhere titles, and access to other PC stores such as Steam, Epic Games Store and Battle.net. During The Outer Worlds 2 Direct segment following the Xbox Games Showcase, Microsoft also announced that the title would be the first game to be priced at $79.99 USD from Xbox Game Studios.
Microsoft Gaming and AMD jointly announced the development of Xbox's next generation of hardware in June 2025, which would entail a "portfolio" of devices aimed at delivering deeper gameplay and visual experiences leveraging the use of artificial intelligence processes, while also encompassing a first-party platform that would not be tied to a single digital storefront and a ubiquitous experience across consoles, handhelds, PC and cloud. The hardware lineup includes the console successors to Xbox Series X/S, which will support full backwards compatibility with existing Xbox games, as well as custom silicon from AMD which will be applied to a variety of platforms beyond Xbox consoles. That same month, it was reported that Microsoft would perform a fourth round of major layoffs within its Xbox division as part of a company-wide reorganization effort ahead of the new financial year, primarily focusing on Xbox distribution across Central Europe, and the ceasing of adjacent operations in certain regions worldwide.
Microsoft Gaming performed a reorganization of their business on July 2, coinciding with the company's larger culling of roughly 9,000 employees across all their divisions. 2,000 Microsoft Gaming affiliates were let go in this restructuring, which included layoffs at Xbox Game Studios developers Turn 10 Studios, Compulsion Games, Undead Labs and Halo Studios of varying capacities; Turn 10, who created and developed the Forza Motorsport series, was reported to have lost nearly half of its current workforce, and had been anticipated to be reformed as a support studio for Motorsports sister series Forza Horizon, according to former content coordinator Fred Russell. Layoffs additionally took place across various Activision studios, including Call of Duty support teams Sledgehammer Games and High Moon Studios, as well as Call of Duty: Black Ops 7 developer Raven Software; The developers of the mobile title Warcraft Rumble were collectively let go at Blizzard Entertainment as support for the game ceased, and a further 200 people were reportedly dismissed from King. The restructuring also included the cancelation of Everwild from Rare, and the Perfect Dark reboot, the latter of which also resulted in developer The Initiative's closure. Multiple unannounced game projects, including an untitled MMORPG developed by ZeniMax Online Studios and planned to succeed The Elder Scrolls Online, were also canceled. Microsoft ceased funding for undisclosed second-party titles from external developers they were attached to publish, including a first-person shooter game from Romero Games intended to be released through Bethesda Softworks, and Contraband from Avalanche Studios, the latter of which resulted in the closure of the developer's UK studio. In addition, Rare veteran and game designer Gregg Mayles, Rare producer Louise O'Connor, and ZeniMax Online studio director Matt Firor left Microsoft following the shuttering of their respective projects, with Firor being succeeded by Joesph Burba as studio director. The Verge reported that the Xbox User Research & Child Safety team had been "hit hard" by the layoffs, with the division's lead reportedly let go in the process.
Bloomberg News report in October 2025 revealed that various recent developments for Microsoft Gaming's business strategy, such as their shift towards multiplatform publishing and a series of price increases on Xbox hardware, software and the Game Pass subscription model, were attributed to demands set by Microsoft CFO Amy Hood for the gaming division to satisfy a 30% profit margin following their acquisition of Activision Blizzard. The margins detailed far exceed the expected quota of 17-22% set forth by other publishers in the gaming industry, while the Xbox division was previously operating at a margin of between 10 and 20%. Journalist Jason Schreier elaborated that these goals correlated with the Xbox division beginning to favor cheaper or higher-profile games over those with more risk after initially cultivating niche titles like Pentiment and Hi-Fi Rush'' throughout the earlier half of the Xbox Series X/S generation, as well as a potential realignment of the hardware divisions. Microsoft Gaming later told CNBC that, although the company sets ambitious objectives, the previously reported 30% profit margin target was inaccurate.
In December 2025, Microsoft announced leadership changes within Microsoft Gaming. Tim Stuart was named Chief Operating Officer of ZeniMax Media, effective in 2026. At the same time, Xavier Pokorzynski was appointed Chief Financial Officer of Microsoft Gaming, taking over financial oversight of Xbox and Microsoft’s gaming businesses.