It announced Microsoft Golf for Windows, based on Access Software's Links, and expanded the games division from two to six people with the intention of commissioning more products from other developers.

[9][10] One of the first major studio acquisitions following the division's formation was Bungie in June 2000, in the midst of its development of Halo: Combat Evolved.

[19] In September 2002, Microsoft Game Studios acquired Rare, who had previously extensively developed for Nintendo platforms.

[9][10] In 2007, MGS announced the opening of a European office in Reading, England, headed by general manager Phil Spencer.

[27] Moore opted to leave Microsoft in July 2007, so to move back to the San Francisco Bay area with his family and to rejoin Electronic Arts.

[30] Simultaneously, MGS founded 343 Industries as an internal studio to develop future Halo games without Bungie.

[32] Microsoft as a whole announced layoffs of up to 5,000 jobs across all divisions in January 2009 due to slowing sales of personal computers as a result of the Great Recession.

[6] Microsoft acquired Vancouver-based BigPark in May 2009, using the studio to develop some of the first games for the upcoming Kinect sensor for the Xbox 360.

[35] Later in 2009, Phil Spencer was promoted to corporate vice-president of MGS, in order to replace the retiring Shane Kim.

[48] While Mattrick had overseen much of the development of Microsoft's next console, the Xbox One, he left in July 2013, prior to its release, to take over as CEO of Zynga.

At this time, Microsoft was facing strong competition in the consumer market, and within the gaming sector, the Xbox One (released in 2013) was more expensive than competitors and had too much focus on non-gaming functions.

Under Nadella's direction, Phil Spencer was named the new head of Microsoft Studios to replace Jason Holtman, who had only been its lead for the prior six months.

[55] Microsoft Studios committed to keeping Minecraft available across multiple platforms, including rival PlayStation consoles.

[64] Kudo Tsunoda left the Xbox division in November 2015 for the development of HoloLens and Microsoft Edge, and other projects that could improve means of human interaction, including voice and gesture.

[69][70] In September 2017, Spencer was promoted to the senior leadership team, gaining the title of "executive vice-president of gaming".

[51] In January 2018, Matt Booty was promoted from leader in the Minecraft games business to corporate vice-president of Microsoft Studios.

[72] On June 10, 2018, during the Electronic Entertainment Expo 2018, Microsoft announced the acquisitions of Ninja Theory, Playground Games, Undead Labs and Compulsion Games,[73] as well as the opening of a new studio in Santa Monica, California, entitled The Initiative, which would be led by the former Crystal Dynamics studio head Darrell Gallagher.

[81] Booty has stated that with studios like Obsidian, Ninja Theory, and Double Fine, which have traditionally supported multiplatform games, they will determine if it makes sense for their future products to be treated as Microsoft-exclusive content for Xbox and Windows computers, or to allow these to be published across multiple platforms.

That decision will be based on a "network effect", whether having these games on other platforms will better support the franchise and thus worthwhile for Microsoft to help dedicate resources towards it, such as they had with Minecraft.

However, the division stated that these releases were generally "existing commitments to other platforms" that they allowed studios to honor, but they otherwise have "no plans to further expand our exclusive first party games to other consoles.

[93] The total price of the deal was $8.1 billion[94] Bethesda Softworks, the primarily publisher for all of ZeniMax's games, remained as an operational unit under Microsoft with the acquisition and retained all its current leadership.

[99] On January 18, 2022, Microsoft announced its intent to acquire Activision Blizzard in an all-cash deal valued at $68.7 billion.

[106][107] On October 26, 2023, Microsoft announced the promotion of several employees in the company, including Sarah Bond being promoted to president of Xbox, overseeing all Xbox platform, business, and hardware work, and Matt Booty promoted from president of Xbox to president of Game Content and Studios, including the new responsibility of overseeing ZeniMax and Bethesda, with Jamie Leder still running Zenimax as a limited integration entity, but now reporting to Matt.