Report: Xbox Has Been Asking Its Studios To Hit ‘Higher Profit Margins’ Since 2023

Right as the Activision Blizzard deal closed…

Image: Anthony Dickens / Pure XboxBloomberg’s ever-reliable gaming journalist Jason Schreier (along with colleague Dina Bass) has today put out an extensive report on Xbox, and how Microsoft is now asking the division to deliver “higher profit margins” in the wake of its massive acquisition of Activision Blizzard.

The report says that MS execs “have set an across-the-board goal of 30% ‘accountability margins'” – a term which Microsoft uses internally “according to people familiar with the business”. Bloomberg also says that “according to estimates from S&P Global Market Intelligence”, the average profit margin in the gaming industry ranges “between 17% and 22%”, going off recent statistics.

The report goes on to mention that its sources say that in the past, developers at Xbox “weren’t asked to hit specific numerical targets”, and that this profit margin goal was introduced “in fall 2023 by Microsoft Chief Financial Officer Amy Hood”. This timing would fall right in line with when the company acquired Activision Blizzard; that deal finally went through in October 2023.

Schreier notes that this profit goal change was quickly followed up by some huge and impactful decisions made by Xbox – including the slow rollout of multiplatform releases, multiple studio closures, several major project cancellations and more. Microsoft provided a statement to Bloomberg in response to this reporting, which we’ll include down below:

“We look at the business as a whole, balancing creativity, innovation, and sustainability across a diverse portfolio of offerings, […] 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.”

This certainly explains a lot of what we’ve been seeing from Xbox over the last few years then, as Microsoft has continued to integrate ABK into its gaming portfolio. We can only wait and see where things go from here, as the team begins to prepare its next-gen hardware for release in the next few years.

Well folks, what do you make of this report? Keep it civil and talk to us about Xbox down in the comments.

[source bloomberg.com]

Ben is a News Writer at Pure Xbox, and is a fan of action, racing and straight-up shootin’ in any Xbox game he can get his hands on. When he’s not clutching an Xbox controller like his life depends on it, Ben spends his time listening to music that’s far too old for him, watching football on the telly and probably eating somewhere.

Author Profile Reply