Microsoft Wants Xbox to Hit a 30% Profit Margin, Well Above Industry Standard

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A recent report reveals Microsoft is pushing for Xbox to become significantly more profitable, aiming for a 30% profit margin – much higher than average for the gaming industry. To reach this goal, Xbox has canceled some projects, increased prices for both its consoles and subscription services, and reduced its workforce by thousands over the past two years.

Bloomberg reporters Jason Schreier and Dina Bass say Microsoft’s CFO, Amy Hood, is pushing for all parts of the company, including Xbox, to reach a profit margin of 30%. This means they want 30 cents of profit for every dollar of revenue.

The report shows a goal of 30% is much higher than typical for video game companies. S&P Global Market Intelligence data indicates that most companies in the industry have historically averaged between 17% and 22%.

Microsoft’s gaming division only made a 12% profit in 2023. Industry-wide, average profit margins haven’t exceeded 22% since 2018, according to estimates from S&P Global Market Intelligence.

Microsoft made a significant shift in July 2025, leading to the cancellation of Perfect Dark, a game developed by The Initiative that had been in the works for approximately seven years. This also resulted in the closure of The Initiative studio. Around the same time, Rare’s Everwild, another game in development for about seven years, was also canceled.

According to an internal memo from Xbox CEO Phil Spencer that TopMob obtained, the cancellations happened because the company is prioritizing areas where it sees the most potential for growth.

Over the past two years, Microsoft has gone through multiple rounds of significant layoffs, and the Xbox division has also been affected.

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2025-10-23 15:18