Xbox's XP Division: Inside the Company's Second Big Bet on Hollywood

Xbox wants to be "the number one entertainment company in the world."

Xbox has made this promise before, and it lasted two years. In 2012, the company launched Xbox Entertainment Studios with a pledge to produce television shows that would air directly on the Xbox 360. By 2014, the division was shut down, its projects scattered and its ambitions quietly shelved.

Now, amid a restructuring that has cut nearly 2,000 gaming staff this financial year, Xbox is trying again. The new vehicle is called XP, and on the surface, it looks like a direct sequel to a failed experiment. The details, however, suggest something more calculated.

What Exactly Is XP?

XP, a play on "Experience Points," is a new division that consolidates Xbox's entertainment ambitions under a single banner. It spans film and television, consumer products, strategic partnerships, and live experiences, organized into four pillars: Xbox Pictures (film and TV), Xbox Products (licensing and merchandise), Xbox Partnerships (sponsors and brand partners), and Xbox Places (broadcasts, in-person events, theme parks, and location-based experiences).

The headline framing that Xbox is now "making movies" is misleading. According to the official announcement, XP is explicitly not a production company. It is a coordinating, licensing, and partnerships operation designed to work with external studios, manufacturers, and event organizers. Xbox is not building a studio lot; it is building a business development arm for its intellectual property.

That distinction matters, and the authorship of the announcement reinforces it. The post introducing XP was written by Matthew Ball, Xbox's Chief Strategy Officer, not by a creative executive. This is a strategy play first and a content play second.

The Leadership Behind the Bet

If XP is the strategy, Kayleen Walters is the operator. Walters moves from President of Mojang to President of XP, bringing a résumé that reads like a blueprint for exactly this kind of division.

She spent 13 years at Lucasfilm, guiding the Star Wars franchise across films, consumer products, and partnerships. At Mojang, she oversaw Minecraft's consumer products business, growing it into a multibillion-dollar operation with more than 250 licensees. She also served as Executive Producer on A Minecraft Movie, which delivered the biggest opening weekend ever for a video game adaptation and finished at number one domestically. She is a producer on the sequel.

Her replacement at Mojang is Maria Angelidou-Smith, who joins as CEO of Mojang and Minecraft starting Monday, October 19. Angelidou-Smith spent nearly a decade at Meta, where she led Facebook Groups, a product used by more than 1.8 billion people monthly. She later led product and technology at Personio and served as Chief Product Officer at Reddit.

Both Walters and Angelidou-Smith report to Xbox CEO Asha Sharma, who authored the company-wide leadership memo. That reporting line clarifies who is driving the vision: the entertainment expansion sits directly under the CEO's office, not tucked inside a marketing or publishing silo.

The Evidence and the Pipeline

Unlike 2012, Xbox now has data. The company is not pitching speculative originals; it is pointing to proven performance across its franchises.

A Minecraft Movie is the clearest proof of concept. Its record-setting box office run demonstrated that a game with Minecraft's scale can translate into a mainstream theatrical event. The franchise-to-screen flywheel has been equally visible on the gaming side. During Season 1 of the Fallout series, hours played in Fallout games on Game Pass increased fivefold. Following the Minecraft movie's release, Minecraft saw more than 75% year-over-year growth in weekly active users as of April 30, 2026.

The reach metrics are just as significant. Minecraft Live reached more than 144 million people, while BlizzCon drew 35,000 attendees in person and 12.5 million at home. These figures describe a company that already operates entertainment properties at scale, even if it has not historically called them that.

And then there is Minecraft itself. Under Walters' tenure, the game grew from 350 million to over 425 million units sold. That is the asset base XP is built to exploit.

The closest competitor model is Sony's PlayStation Productions, which has similarly positioned itself as a bridge between game franchises and film and television. Xbox's approach differs in that it is not producing in-house, but the strategic intent is comparable: own the franchise, partner for the execution.

The projects already in motion give XP a tangible pipeline. Minecraft Squared, the sequel to A Minecraft Movie, is in production. Fallout Season 3 is on the way. A Call of Duty film is in development with Peter Berg and Taylor Sheridan attached. A Diablo animated series is set for Netflix.

Perhaps the most telling signal is the Kojima Productions deal for Physint, which notably includes film and television rights. Xbox is now structuring game deals with adaptation potential baked in from the start, rather than treating screen rights as an afterthought.

As for Xbox Places, the existing templates are BlizzCon and Minecraft Live. Both demonstrate that Xbox properties can sustain large-scale live events, and both offer a foundation for the theme parks and location-based experiences the division has signaled as a target.

Déjà Vu? The Xbox Entertainment Studios Precedent

The comparison to Xbox Entertainment Studios is unavoidable. Launched in 2012, XES was designed to produce original television content that would stream directly on Xbox consoles. It was an ambitious, vertically integrated bet that assumed the console itself could become a distribution platform for premium entertainment. It lasted two years.

The failure was structural. XES produced content in-house, locked it to a single platform, and arrived before streaming had fully reshaped viewing habits. It was the wrong model at the wrong time.

XP inverts nearly every one of those choices. It does not produce content; it partners. It does not lock distribution to Xbox hardware; it licenses broadly. And it is built on franchises with demonstrated audience demand rather than speculative originals.

Still, the timing invites scrutiny. The XP announcement arrives amid Asha Sharma's "Reset," a restructuring that has eliminated nearly 2,000 gaming roles this financial year. Announcing an entertainment expansion while cutting game development staff raises an obvious question: is XP a genuine investment signal or a rebranding of existing licensing efforts? The question is not merely rhetorical. If XP's licensing revenue is intended to offset declining margins elsewhere in the business, then the division functions as a financial hedge rather than a growth engine, a distinction Microsoft has not clarified publicly.

The official language offers a clue. The Xbox Wire post states the ambition is to become "the number one entertainment company in the world." IGN has paraphrased this as "the number one entertainment and gaming company," but the official phrasing is narrower. Gaming is not the stated goal; entertainment is. That is a meaningful distinction for a company whose core business remains consoles and software.

The Bet That Hinges on Partners

XP is not a guaranteed success, and it is not a repeat of 2012. It is a lower-risk wager built on licensing proven franchises rather than producing original content, and its leadership has direct experience turning game properties into cross-media businesses.

But the central tension remains unresolved. Xbox is spending on entertainment expansion while cutting gaming staff, and the division's success depends on whether external partners can deliver where Xbox's own studio could not. Whether XP represents a complement to first-party game investment or a substitute for it is a question the company has left open, and one that will shape how the gaming community interprets every subsequent announcement.

What to watch is straightforward: the performance of Minecraft Squared, the reception of Fallout Season 3, and whether Xbox Pictures, Products, Partnerships, and Places produce measurable results or remain an organizational chart in search of evidence. Until then, "the number one entertainment company in the world" is a mission statement, not a track record.