Netflix withdraws $500 million Xbox offer after $800 million counter-demand

Netflix withdrew a $500 million offer for seven years of exclusive rights to adapt Xbox games into films and television after Xbox chief executive Asha Sharma countered with an $800 million demand, ending the proposed portfolio-wide adaptation deal.

Peter Rice, a Netflix executive, made a $500 million proposal to Xbox chief executive Asha Sharma covering seven years of exclusive adaptation rights. Spence Neumann, Netflix’s chief financial officer, was among the executives who viewed the $800 million counteroffer as too expensive. The report left out which individual games the proposed deal would include, and the specific Xbox games covered by the proposed seven-year rights deal remain unclear. Kotaku cited Doom, The Elder Scrolls, Gears of War, Call of Duty and Space Quest as Xbox properties relevant to the talks.

Roughly 1,000 employees lost their jobs in Netflix layoffs earlier in October 2026, and Netflix dismissed Bela Bajaria and Dan Lin shortly afterward. Talks ended before reaching a serious stage as a senior Netflix executive left during the layoff period. Bela Bajaria, the former Netflix chief content officer, had reportedly approached Xbox first about the adaptation agreement. Dan Lin reportedly disagreed recently with Greta Gerwig about releasing her Netflix film Narnia: The Magician’s Nephew.

In a statement, Xbox said Netflix remains a valued partner and pointed to record-breaking interest in adapting its intellectual property. “Netflix is a valued partner,” Xbox said. Xbox cited its upcoming animated Minecraft and Diablo series as proof of continuing cooperation with Netflix.

Xbox is abandoning the single portfolio-wide deal in favor of smaller licensing agreements with production partners. Microsoft created a new cross-media entertainment division called Xbox XP in early October to broaden game franchises into movies, series and other entertainment. Reporting cited by Kotaku did not confirm that the new division’s creation stemmed specifically from the failed Netflix deal. An industry insider told Kotaku that over-valuing its intellectual property may have led Xbox to create the new department after the failed Netflix deal.

Works already in progress include an animated Minecraft series, an animated Diablo series and a live-action Gears of War film developed alongside Netflix. Netflix teamed up with Gears of War developer The Coalition in 2022, while a live-action Gears of War movie and animated Gears of War series have been in development for some time. The animated Minecraft series dates to 2024, while the animated Diablo series received confirmation in September 2026. Existing separate arrangements with Netflix will remain in place.

Amazon’s Fallout series, Warner Bros.’ Minecraft movie, Illumination’s Super Mario films and HBO’s The Last of Us have drawn large audiences to game-based adaptations. Success with these adaptations has encouraged major studios to hunt for their own game licenses, though not every project has been well received. A live-action Wolfenstein series and another Fallout season are in production at Amazon, while Paramount is developing a Call of Duty blockbuster film. At BlizzCon 2026, Blizzard Entertainment president Johanna Faries suggested Overwatch and Warcraft might receive film or television adaptations.

Netflix distributes or has produced series based on Cyberpunk, League of Legends, The Witcher and Castlevania, and it holds rights to a live-action Zelda series set for next year. Netflix declined to comment on the reported negotiations with Xbox.

Leadership churn and restructuring are affecting Xbox Game Studios, including Chief Operating Officer Helen Chiang leaving after three months and upcoming staff reductions. Arkane’s nearly completed Blade project may close if no external buyer purchases the studio. Gears of War: E-Day and other major Xbox games cost more than $500 million per title to produce. Game development costs are rising and Microsoft is seeking other revenue streams through media licensing as the leadership changes and studio restructuring take place, and staff are also navigating strict office mandates.

Major successes this year included the Resident Evil reboot, Illumination’s Super Mario films and Sonic movies. Street Fighter and Mortal Kombat 2 adaptations released this year received a muted response. According to Kotaku, Paramount’s Halo television series did not capture the zeitgeist as well as the studio’s Sega-related efforts.

Xbox and Netflix still plan future projects together despite the collapsed exclusivity deal, and Microsoft maintains separate partnerships with Netflix and other companies expected to continue. Microsoft would spread its gaming properties across studios and streaming platforms rather than locking them to one distributor for seven years.