Microsoft has reportedly ordered its Xbox division to boost profits at a reasonable rate
The past 12 months have been stressful for anyone invested in the long-term future of Xbox and the general health of the gaming industry. Back in May, Microsoft laid off 3 percent of its global workforce, and the division of the company was one of the most affected, and several upcoming titles were canceled later. It painted a picture of a brand in trouble, but according to a new report, Microsoft has been setting up its illogical Gaming Division for several years.
Sources Told Bloomberg That in 2023, Microsoft used the goal “Across the Board” margins of 30 percent, the report calls Microsoft Call “Margins” inside. by BloombergJason Scyreier reports, this target, set by Microsoft CEO Amy Hood in Wil 2023, is above the recent industry average of 17-22 percent. Schreier adds that the average for XBOX itself in the last six years is between 10 and 20 percent.
S & P’s global analyst Neil Barlour told Bloomberg That 30 percent target is 30 percent is the kind of margin “usually reserved for the publisher who actually puts it in.” This is despite the fact that its share of games only reaches 12 percent in the first nine months of 2022, as cited in this report.
A Microsoft spokesperson said Bloomberg That it looks at individual games and projects in a different way in terms of success, adding that sometimes it has to make difficult decisions, so it can change resources to work on projects “that are in line with our direction.”
These new profit targets were introduced in the same year that Microsoft finally received its $ 68.7 billion acquisition of actisision blizzard, it will very well put the most popular franchises such as call of duty and diablo. Back in 2020 it found Zenimax, the parent company of Bethesda, which means that long series like The Old Scroll and Fallout also now live under the umbrella of Xbox games.
Since 2018, Microsoft has been putting all of its first releases on Game Pass from day one, but this model is impacting games by failing to hit its 30 percent revenue goals, according to Bloombergsources. Xbox offers developers what it calls a “weighted value” credit, which takes into account factors such as the combined number of transfer hours spent on the game, although this formula tends to benefit more multiplayer titles. Go ahead, BloombergMicrosoft’s sources said that Microsoft is likely to seek funding for games with lower development costs and funds obtained at a proven level over decia projects.
XBOX has succeeded in bringing some of its original team games to other platforms, including its main rival Sony’s PS5, with major titles such as Forza Horizon 5 and Indiana Jones and the Great Circle making the jump in the last 12 months. After Microsoft raised the price of Xbox Consoles last month, for the second time it did so in 2025, and slapped a 50 percent paid game that went in early October. This week the company increased the cost of Xbox Dev Kits by $500.
