Microsoft has denied reports that it imposed a strict 30% profit margin target on its Xbox gaming division, saying the figure cited in recent media coverage was incorrect, even as the company reshapes its gaming strategy around cloud services and cross-platform access.
The company was responding to an October report by Bloomberg that said Microsoft Chief Financial Officer Amy Hood had set a 30% profit goal under so-called “accountability margins,” with Xbox under particular pressure. In a subsequent interview with CNBC, Microsoft rejected that claim, saying, “While the company does set ambitious goals, the reported 30% profit margin target was incorrect.”
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The reported target had drawn attention because it would be well above typical gaming industry margins, estimated at around 17% to 22%, and higher than Xbox’s own margin of about 12% in 2022, according to earlier disclosures. Speculation around the figure intensified following widespread cost-cutting across Microsoft’s gaming operations.
Over the past year, Microsoft has laid off more than 9,000 employees across several rounds and cancelled multiple high-profile projects, including Perfect Dark, Everwild and ZeniMax Online Studios’ sci-fi MMO known as Project Blackbird. Xbox hardware sales have also fallen sharply, with reports of a roughly 70% drop in November, leaving the brand trailing Sony and Nintendo.
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Despite the challenges, Microsoft is doubling down on subscriptions, cloud gaming and releasing Xbox titles across a wider range of devices, including PCs, handhelds and mobile platforms, as it seeks to expand its audience and reduce reliance on console sales alone.
Source: CNBC