Microsoft will be selling its online gaming division for $2 billion, according to people familiar with the matter.
The deal is a sign that Microsoft has begun to diversify its revenue stream to attract more users, which is crucial for Microsoft to stay competitive in the digital arena.
Microsoft has said it wants to expand its online business to include online gaming and entertainment services, such as Xbox Live, gaming on the Xbox One, games on the Windows Store and services for Xbox One owners.
It will sell its video games business for about $2.4 billion, which it says will make it one of the largest online game developers in the world.
The company is looking to sell the gaming business, said the people, who asked not to be identified because the deal is private.
The $2-billion figure represents a 75 percent increase over the previous estimate Microsoft made last month.
The company also expects the online gaming revenue to grow to $2 trillion by 2021.
Microsoft’s online gaming efforts are a result of a partnership with Chinese game studio Tencent Games, which helped make the game Minecraft available on PC and mobile platforms.
Microsoft has partnered with Tencent on several other games, including a deal to sell Minecraft-like apps for Apple’s iPhone.
Microsoft and Tencent were in talks to merge in the fall, but those talks collapsed in February when Microsoft said it would not make the $500 million payment required by the agreement.
Microsoft is also working on a video game that will be based on a popular series of video games called Star Wars: The Old Republic.
Microsoft says it will not be releasing any Star Wars-related content for at least another year.
The deal with Ten cent is a significant boost for Microsoft in the video game market.