Xbox Reportedly Asked Netflix for $800 Million - Then Built the Division It Could Have Sold

On 8 October 2026, Xbox announced XP, a new division dedicated to turning its games into films, television series, merchandise and live experiences. Roughly two weeks later, Puck reported that Netflix had offered Microsoft $500 million for exactly that kind of arrangement, and that Xbox countered at $800 million. Netflix walked away.

The sequence matters more than the number. By the time the report surfaced, Xbox had already built the division Netflix wanted to license. Netflix's then-chief content officer Bela Bajaria, who made the offer, left the company on 15 October 2026, before the Puck report surfaced. Two companies passed each other in the night, and each is now constructing the adaptation business the other once wanted to buy. The stakes are clearest in the reported seven-year exclusivity ask, which would have covered Xbox's catalogue rather than individual titles.

A note on sourcing before anything else: the figures come from a single Puck report (Matthew Belloni, 22-23 October 2026), and no confirmation from Microsoft or Netflix appears in the coverage. Treat the numbers as reported, not established.

What Puck Actually Reported

According to Puck's Matthew Belloni, writing in his "What I'm Hearing" newsletter in late October 2026, Netflix proposed a $500 million payment for a seven-year exclusive licence to adapt Xbox titles into film and television. The offer came under then-Chief Content Officer Bela Bajaria.

Xbox CEO Asha Sharma and her business affairs team responded with a counter of $800 million. Netflix withdrew the offer, and no deal was signed. The report was subsequently amplified by outlets including The Verge, IGN and Eurogamer, all working from the same origin.

The distinction that matters here is scope. This was not a negotiation over individual titles. It was a proposal for blanket exclusivity across Xbox's catalogue - a single streaming home for every Xbox adaptation for seven years. That is a fundamentally different proposition from the project-by-project deals the two companies have struck in the past, and it explains why the price tag ran into the hundreds of millions.

Netflix's Turbulent October

The collapse has two causes, not one, and the second sits entirely inside Netflix.

Bajaria was ousted as Chief Content Officer on 15 October 2026, replaced by former Disney and Fox executive Peter Rice. Her departure was announced a day after Netflix said it was laying off roughly 1,000 employees, about 6% of the company's staff - what Variety called the streamer's largest axing to date, though other coverage described it as its largest round of cuts since 2022. Film-side exits followed, including film chief Dan Lin.

Bajaria, who made the Xbox offer, left the company on 15 October 2026, before the Puck report surfaced. Even if the $800 million counter had not stalled talks, the deal had lost its sponsor inside Netflix. The two factors compounded rather than competed: Xbox's ask created the deadlock, and Netflix's leadership upheaval removed the person with the incentive to break it.

XP: The Division Xbox Built Instead

Xbox announced XP on 8 October 2026, before the Puck report surfaced. The division spans film and television through Xbox Pictures, consumer products, strategic partnerships and live experiences - a transmedia operation rather than a pure film and TV unit.

It is led by Kayleen Walters, the Mojang president and Lucasfilm veteran, with Reddit's Maria Angelidou-Smith stepping in to run Mojang. Xbox chief strategy officer Matthew Ball authored the announcement post on Xbox Wire, and Sharma circulated a separate staff memo that the company also published.

The ambition is explicit. "Our ambition at XBOX is to be the number one entertainment company in the world," the announcement read, with Xbox citing the performance of A Minecraft Movie and the Fallout series as the template it intends to follow.

That timing is the story. A division announced before the reported Netflix standoff undercuts any reading of XP as a reactive move. If anything, it suggests Xbox had already decided that adaptation rights were worth holding rather than licensing wholesale.

Business as Usual on Individual Titles

The failed negotiation killed blanket exclusivity, not the working relationship. Animated Minecraft and Diablo series remain in development at Netflix, and a live-action Gears of War film is still in the pipeline.

That nuance matters against any framing of the two companies falling out. They are still making things together. What Xbox rejected was the idea of handing one partner the keys to its entire catalogue for seven years. Had the deal gone through, blanket exclusivity would have concentrated every Xbox adaptation under a single roof - a significant shift in how those projects reach audiences, though the precise downstream effects remain a matter of analysis rather than reporting.

Blunder or Signal?

There are two defensible readings of the $800 million counter, and the available reporting does not settle which is correct.

The first is that Xbox overplayed its hand - that an ask $300 million above the opening offer priced the company out of a deal it might otherwise have taken, and that the description of the episode as a blunder is fair. Kotaku, for one, framed the episode as Xbox having "bungled" the deal, but that is interpretation, not fact.

The second is that the counter was a deliberate signal. With XP already announced, Xbox had a structure in place to develop adaptations in-house. Naming a price Netflix would refuse is one way to keep rights close without formally walking away from the table.

Both readings sit inside Sharma's broader strategy since she became CEO in February 2026: aggressive cost-cutting and studio consolidation running alongside expansion bets like XP and Xbox Labs. The pattern is a leaner but broader Xbox, one that treats its intellectual property as premium content rather than a licensing revenue stream. That approach echoes other recent moves in the industry to lock down exclusive content, such as Netflix's existing Minecraft and Diablo series and the live-action Gears of War film.

The episode is already being read as a cautionary tale about negotiating leverage in an era when game publishers believe their catalogues are worth more than streamers are willing to pay.

Three Weeks, Two Divisions, One Unanswered Number

The irony is difficult to miss. Within weeks, Xbox built the division Netflix wanted to license. Netflix changed the executive who wanted to license it. And the two are still making Minecraft and Gears of War projects together, just not under one roof.

Whether XP vindicates the $800 million ask or exposes what refusing it cost will not be clear for some time. The division's first output, its first licensing decisions and its first partnerships will be the real evidence. For now, the number remains a report from a single outlet, not a receipt - and until Microsoft or Netflix says otherwise, that is all it is.