Microsoft’s game division was about to face an impossible task. Game Pass price increase and mass layoffs are just some of its consequences

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Microsoft Gaming has faced criticism recently, especially following its acquisition of Activision Blizzard. Over the past two years, there have been numerous studio closures, layoffs, and canceled games. Adding to player frustration, the price of the Game Pass subscription has recently increased significantly.

So, it turns out all the drama and big changes happening lately might just be down to one person calling the shots. And it’s definitely not Phil Spencer, which is… interesting, to say the least. As a gamer, I’m just trying to figure out who’s really pulling the strings here!

Ambitious objective for the Xbox division

Microsoft set a challenging goal for its Xbox division in fall 2023. According to sources familiar with the company’s plans, Chief Financial Officer Amy Hood tasked the gaming division with reaching a 30% profit margin – a target considered difficult for a company with average performance.

  1. This result is significantly above the industry average. According to estimates by S&P Global Market Intelligence, the average profit margin for video games in recent years has ranged between 17% and 22%. The target set by Hood would therefore only be achievable for the best-performing companies.
  2. From official court documents, we know that during the first nine months of the 2022 fiscal year, Microsoft was only making a 12% profit margin. Therefore, the company’s CFO intended to more than double the profitability ratio.
  3. Unofficial sources report that before 2023, developers collaborating with the Redmond giant were not required to achieve specific profits and were instead focused on delivering the best possible games without worrying about financial constraints. Right now, not every project is expected to reach the 30% profit margin, but Xbox-related teams are encouraged to aim for this target.

Okay, so I’m hearing from people in the industry that Xbox is likely going to focus on smaller games that can make a quick buck. It sounds like they’re realizing big, sprawling titles aren’t always the best way to go. Plus, it seems like the team that makes the Xbox consoles themselves might be getting a major shake-up – a complete overhaul, basically. It’s a pretty big change, and I’m curious to see how it all plays out.

Microsoft’s “main antagonist”

Many gamers tend to blame Phil Spencer, the head of Microsoft Gaming, for the company’s more criticized decisions lately. As the public face of Xbox, he often represents Microsoft in discussions. Some industry experts even believe Spencer is the main reason Xbox hasn’t completely lost its relevance.

Adam Hales of Windows Central believes Phil deserves an apology from everyone, as he’s likely the main reason Xbox still exists despite its current challenges.

Recent reports suggest Amy Hood is heavily influencing decisions at Xbox, and some industry observers question those choices. There’s a growing feeling that she and CEO Satya Nadella are making strategic errors that are harming Xbox, particularly by prioritizing AI over core gaming concerns and pursuing unsuccessful business strategies.

However, some in the gaming community remain unhappy with Phil Spencer’s decisions, accusing him of simply agreeing with his superiors, such as Amy Hood. This has led to debate about who is truly responsible for decisions that are perceived as damaging to the Xbox brand, and who the real driving force behind them is.

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2025-10-24 12:04