Microsoft could be selling Xbox Entertainment Studios to Warner Bros.

Microsoft announced some very big changes last month, including layoffs, and the eventual shutdown of Xbox Entertainment Studios, the division that was tasked with developing original shows for the company’s new gaming console. If new reports are to be believed its likely that XES might find a new home. Apparently Xbox Entertainment Studios is looking for a buyer and has already participated in preliminary talks with Hollywood giant Warner Bros. Even though the closure of XES has been announced, Microsoft’s Xbox boss Phil Spencer made it clear that Halo: Nightfall and Steven Spielberg’s Halo project will continue under 343 Industries.

The recent closure of Xbox Entertainment Studios by Microsoft as an effort to refocus the company signaled that the company’s digital TV ambitions on Xbox was likely coming to an end. Outside of a few existing projects in the works like the high profile Halo: Nightfall, it seemed that Xbox would not focus seriously on TV show content for its players going forward. But now there’s some interesting news out of THR that says Microsoft is shopping around Xbox Entertainment Studios to Warner Bros. The media giant is reportedly considering merging XES with the video game network it already has a large stake in, Machinima, though reps for both have declined comment on the possible deal as of yet. Many may not realize that Warner Bros. even owns a large part of Machinima, but as recently as March 2014, Warners led a $18M round of funding for them. Machinima is often viewed as the “only game in town” when it comes to high profile YouTube video game partnerships, allowing their content creators to make videos featuring game content free from many tricky copyright issues that plague the unaffiliated. Though even their partners ran into trouble during a recent YouTube crackdown on content, and many pointed the finger at Machinima for not doing enough to prevent it.