by: Alex Valdes | CNET
The Xbox reset continues. Despite a rough year of revenue losses, layoffs and major restructuring, the Microsoft gaming division announced Thursday that it’s going big into the entertainment industry and elsewhere.
After the resounding success of A Minecraft Movie and the Fallout TV series — both of which are longtime video game titles — Xbox is creating a division called XP to expand its video game brands into movies, TV, merchandise and even live events, the company said.
Xbox has hundreds of games in its catalog, with only Minecraft, Fallout and Halo adapted for film and TV. But there are a few other adaptations in the works — movies for Call of Duty and Gears of War, and a Netflix animated series for Diablo.
“Our ambition at Xbox is to be the number one entertainment company in the world,” Chief Strategy Officer Matthew Ball said in the announcement.
XP, which refers to “experience points” in the gaming world, will consist of four departments. Xbox Pictures will create more film and TV adaptations; Xbox Products will develop licensing and merchandise; Xbox Places will host live events and broadcast events in theme parks and other locations; and Xbox Partnerships will collaborate with creators and brands to make new experiences.
Xbox CEO Asha Sharma named Kayleen Walters as president of XP. Walters was executive producer of A Minecraft Movie, which led all movies in US ticket sales and grossed $424 million in the US last year. She is now a producer for the sequel, A Minecraft Movie Squared, scheduled for release in theaters on July 23, 2027.
Before joining Xbox’s Mojang Studios in February 2025, Walters spent 13 years at Lucasfilm running successful global marketing campaigns for the Star Wars franchise.
Sharma also announced Maria Angelidou-Smith, a former VP at Meta and chief product officer at Reddit, will become CEO of Mojang and Minecraft.
It’s been an eventful tenure for Sharma since becoming Xbox CEO in February. Revenue dropped $1.7 billion, or about 7%, from July 2025 through June 2026. On July 6, Sharma announced a reset — “the most significant restructure in Xbox history” — laying off 3,200 people by mid-2027 and moving four studios out of Xbox and under new management.
Expansion is smart, analyst says
With its gaming business struggling, Xbox is making a smart move, says streaming media analyst, author and speaker Dan Rayburn.
“They have to expand outside of the core gaming audience,” Rayburn told CNET. “They’re realizing, with how much content is being licensed these days and all the different platforms out there, let’s create more content off our brand that others might want to license for their streaming services.”
Moving beyond the confines of the console definitely worked for A Minecraft Movie and Fallout, and their success on screens boosted Xbox’s gaming business. There was a 75% increase in weekly active users of Minecraft after the movie’s release in spring 2025, and there was a fivefold increase in hours played on the various Fallout game titles during the TV series’ first season on Prime Video.
But whereas Minecraft and Fallout found enthusiastic audiences in the entertainment world, that won’t be true for all of Xbox’s games, Rayburn said.
“They’re going to know that certain brands aren’t going to resonate with certain individuals outside of gaming, so you have to pick and choose the right content,” Rayburn told CNET. “That’s why hiring someone from the film business (Walters) is the key point here. They took a film executive as opposed to a gaming executive. You can’t have a gaming executive running that.”
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