With Microsoft concentrating on cloud and products, their adventure into video content creation became short lived. The Xbox gaming platform has been successful, but entertainment is a more risky business. So with plans to shutter their Xbox Entertainment Studio (XES) arm, the possibility of a sale has emerged. Per the Hollywood Reporter, "XES is shopping for a new home and has had preliminary talks with Warner Bros. about possibly becoming a stand-alone entity based at the studio. In that scenario, Warners would look to merge XES with Machinima, the video game-centric YouTube network in which it owns a stake."
Given the rise of OTT platforms, this kind of deal makes tons of sense if the content inside the Xbox pipeline has some value to begin with. A deal with XES doesn't necessarily automatically deliver a platform deal to the WB. In addition, I would love to learn through Xbox research how many hours of video content are already being consumed through the platform. I can only imagine that the vast majority comes through Netflix, Hulu, and You Tube access. Lastly, one can only hope that the content coming out of XES is both desirable to the core audience and able to deliver some revenue in return.
In this case, it appears XES may have some distribution opportunities on premium cable as well. Valuable content with cross platform interest that grows audience interest and long term appeal can do quite well. Their hope is that their Halo franchise is case in point. For Warner Bros, it is a continued eye on a future outside the traditional platforms of theatrical and television. The rise of digital distribution across OTT platforms adds another market to mine. And having content that appeals to the Xbox core audience demo may be a good fit.