Microsoft Has Reportedly Pushed Xbox Division to Hit 30% Profit Margins
Written by admin on October 26, 2025
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William D’Angelo
, posted 3 days ago / 2,507 Views
Microsoft has been pushing the Xbox gaming division to increase its profit margin, according to a new report from Bloomberg that spoke with people familiar with the business.
Executives over the past two years have set a goal of 30 percent “accountability margins,” which is a term Microsoft uses instead of profit margins. The sources state Xbox division in order to reach these goals has canceled projects, raised prices, and cut thousands of jobs.
A 30 percent profit margin is above the averages seen in the video game industry that in recent years has ranged between 17 percent and 22 percent, according to estimates from S&P Global Market Intelligence. Profit margins at the Xbox gaming division have been between 10 percent and 20 percent over the past six years. Court documents revealed Xbox had a 12 percent profit margin through the first nine months of the 2022 fiscal year.
S&P Global analyst Neil Barbour stated the 30 percent goal is the outer range of what a gaming studio can reach in a boom year. “A 30% or better margin is usually reserved for a publisher that is really nailing it,” said Barbour.
The Xbox gaming division in the past weren’t asked to hit specific numbers, according to the people. Xbox was told to focus on making the best games possible without worrying too much on finances. However, that changed in fall 2023 when Microsoft Chief Financial Officer Amy Hood set the new target.
The new target has forced Microsoft Gaming CEO Phil Spencer to find ways to cut costs and increase profits. This has included releasing more games on rival platforms like Sony’s PlayStation and the Nintendo Switch, cancelling games that includes Everwild, Perfect Dark and Project Blackbird, as well as closing studios and laying off thousands of employees.
Not every project at Xbox is expected to hit the 30 percent target, however, Xbox developers and groups have been told about the new goals, according to the people.
The sources claim the Xbox division will focus more on games that are more likely generate significant revenue windfalls or are cheaper to make rather, rather than taking riskier bets.
“We look at the business as a whole, balancing creativity, innovation, and sustainability across a diverse portfolio of offerings,” said an Xbox spokesperson. “As with any creative business, sometimes that means making hard decisions and stopping work on things that are no longer working for a variety of reasons, and shifting resources toward the projects that are more aligned with our direction and priorities.”
A life-long and avid gamer, William D’Angelo was first introduced to VGChartz in 2007. After years of supporting the site, he was brought on in 2010 as a junior analyst, working his way up to lead analyst in 2012 and taking over the hardware estimates in 2017. He has expanded his involvement in the gaming community by producing content on his own YouTube channel and Twitch channel. You can follow the author on Bluesky.
