Xbox is setting up a new films, TV shows and merch division

One would have thought that Asha Sharma, Matthew Ball and the rest of the new Xbox leadership team would currently have enough on their plate trying to bring the Xbox brandname and ecosystem back from the brink of irrelevance, but apparently… no. Microsoft announced that it’s creating a new division within Xbox called simply “XP” in the hopes that it will both expand its audience and create new revenue steams for the company.

XP will consist of four branches: Xbox Pictures, Xbox Products, Xbox Partnerships and Xbox Places, focusing on film and television adaptations, licensing and merchandise, sponsors and brand partners, broadcast and in-person events, theme parks and other location-based experiences respectively. The new division will be headed up by Kayleen Walters, who previously served as studio head of Mojang Studios and vice president of franchise development at Microsoft in Redmond with great success.

On one hand, it’s the kind of business decision that makes perfect sense at first glance: Microsoft owns some quite valuable intellectual properties and it would seem foolish to not capitalize on those, especially given how much Hollywood, streaming services and TV networks need well-known brands from other types of entertainment to develop movies and TV shows around. The Halo TV show on Paramount Plus was not a success, but the Fallout one on Prime Video was, proving that video game adaptations really can work if they are of high enough quality. Sometimes they can even be extremely successful despite being decidedly mediocre pieces of entertainment, as A Minecraft Movie also proved.

On the other hand, Microsoft may be overestimating the actual value of its IP portfolio as a whole. Minecraft, yes, is a potential goldmine: movies, TV shows, merchandise, theme parks, they will all do very, very well for the company (assuming they are high-quality products and not just soulless cash grabs). No other brand owned by Microsoft wields the same kind of power, though – and investing large sums of money in order to turn second-rate brands into household names rarely ever works. The products themselves based on largely unknown brands would have to be of exceptional quality to find mainstream success… and that’s just not happening often.

It will be interesting, then, to see what is it exactly that the Xbox leadership is planning to base this new initiative on other than Minecraft. Furthermore, it will be interesting to see how XP – as a division focused on specific things, many of which will be out of its control – will become a financially sustainable operation, especially in the long term, since this is what Microsoft is supposedly pressuring the Xbox business overall to achieve. If one means to be a realist rather than a dreamer, the chances of Microsoft creating a viable, profitable cross-media business unit based on Xbox IP are much fewer than the chances of Microsoft spending a lot of money without getting all that much in return.

Most of all, though, this latest Microsoft choice seems to have hit a nerve with loyal Xbox fans who point out the obvious online: so, over the past 6 months, we’ve all bore witness to an “Xbox reset” that was little more than a bloodbath of operation downsizing, job cuts and development studio closures… only to now have the Xbox leadership expand its business to non-gaming ventures? Some of the branches of XP – such as Xbox Partnerships or Xbox Places – are basically new marketing departments comprising of people already working in other marketing roles within the company, yes. But films, TV shows and… parks? Is this what the Xbox brand needs in order to win consumers back, truly compete with PlayStation and remain relevant in the marketplace?

This being the modern entertainment business, there’s always room for surprises, so… who knows? Maybe the new Xbox leadership does have a solid plan here and maybe, just maybe, a touch of mainstream appeal could help the Xbox get back on track. It’s just that, after how things played out over the last decade or so, it feels that Xbox should focus on getting the basics right first and then look into ways to build on that.

Microsoft itself freely admits there’s a lot of work to be done if Xbox is to actually become competitive in the gaming market again, let alone “be the number one entertainment property in the world”. But what business decisions such as establishing this XP division look like – from the outside, right now – is basically throwing things at the wall and see what sticks. That is not strategy. That’s blind hope and, just like with Game Pass, cloud gaming and rampant acquisitions, we’ve all seen where that can lead, no?