Netflix (NFLX) reportedly wanted seven years of exclusive film and TV rights to Microsoft’s (MSFT) Xbox game library, which includes popular titles such as Halo and Gears of War.
The streaming company is said to have offered a deal worth half a billion dollars. But Microsoft wanted much more.
According to Matthew Belloni’s report in Puck News, Xbox CEO Asha Sharma asked for $800 million instead, Gadgets Now noted. Then Netflix said no and pulled its offer entirely after an executive change.
How the Netflix-Xbox talks collapsed
The original $500 million offer came from Bela Bajaria, Netflix’s former chief content officer. Sharma and her team countered with an $800 million ask, which Netflix CFO Spencer Neumann rejected because it was too expensive, Puck reported. However, the deal was still on the table at the time.
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Then a Netflix restructuring in mid-October brought about 1,000 job cuts and the exit of Bajaria after a decade with the company. After Bajaria left, former Disney executive Peter Rice stepped in as her replacement, Netflix announced.
It was only after the replacement that the Xbox offer came off the table.
Why Xbox felt confident asking for $800 million
Xbox had its reason for asking for a higher amount. Amazon’s “Fallout” show and HBO’s “The Last of Us” both proved that a hit TV adaptation can improve game sales and bring old titles back to life.
And with the 2023 purchase of Activision Blizzard, Microsoft owns the biggest game catalog outside of China.
On Oct. 8, 2026, Microsoft also launched a new division called Xbox XP, led by former Mojang president Kayleen Walters, Xbox confirmed. The group was formed to handle film, TV, merchandise, live events, and brand partnerships.
“Our franchises can mean more to people than the time they spend playing them,” Sharma said in a staff message, as Morningstar reported.
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Now, instead of entering an encompassing exclusive deal with just one company, Xbox is pursuing multiple smaller deals. For example, Amazon gets “Fallout” Season 3, Paramount Pictures gets a “Call of Duty” movie, and Netflix still gets “Gears of War” and “Diablo.”
What the walk-away signals for Netflix shareholders
Netflix investors have been worried about the company spending too much, and the stock’s third-quarter results suggest their worries are valid.
In Q3, Netflix’s revenue grew 12% year over year to $12.9 billion, which sounds fine at first glance, but the company also lowered the forecast for its 2026 advertising revenue from $3 billion to $2.7 billion, an SEC filing confirmed.
A lower ad revenue forecast means Netflix expects less money to come in, which is why investors are paying attention to its spending.
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Wall Street was already losing patience before that report. Back in July, Barclays analysts said Netflix was “losing narrative control,” meaning investors no longer trusted its growth story, Stocktwits reported. When investors begin to lose trust in a stock, the company’s management usually has to prove it can be careful with cash.
Netflix rejecting Xbox’s counter can be seen as a sign that the company’s new leadership is doing exactly that.
The risk Netflix takes by passing on Xbox IP
If gaming adaptations keep producing hits, Netflix could watch competitors build loyal fan bases that might have helped to improve its own number of subscribers.
Microsoft said Netflix remains a “valued partner,” so the other projects they’re working on together, like the Minecraft and Diablo shows, are still on track.
