Microsoft’s Sky-High Profit Goals For Xbox May Be Doing More Harm Than Good – Report

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2025 has been a difficult year for Xbox. The company faced significant layoffs, increased prices for consoles and Game Pass, and criticism regarding its work with Israel, all of which have created challenges for its gaming division. A recent Bloomberg report by Jason Schreier reveals that a strong push for higher profits appears to be the main driver behind these changes.

The report indicates that Microsoft executives have been aiming for a 30% profit margin on all products for the last two years. This target was established by Amy Hood, Microsoft’s CFO, and her team, who have become more involved in the company’s gaming division recently.

According to reports from S&P Global Market Intelligence, the average profit margin for the video game industry has been around 17% to 22% since 2018. Xbox’s profit margin has typically fallen within the 10% to 20% range during that same period.

So, Bloomberg’s reporting that putting all our first-party Xbox games on Game Pass actually seems to be lowering overall sales. It’s kinda weird, right? But apparently, Xbox has this system where they try to figure out how much a game is ‘worth’ based on how much time Game Pass subscribers spend playing it. They use a bunch of different things to calculate it, like total hours played across everyone on the service.

Xbox is trying a new approach by releasing some of its exclusive games on PlayStation 5. Games like Indiana Jones and the Great Circle, Sea of Thieves, and Forza Horizon 5 have recently become available on PlayStation 5 and are selling well.

I’ve been following the news about Xbox, and it sounds like they’re really shifting their focus. Apparently, sources are telling Bloomberg that from now on, they’re going to prioritize games that are either inexpensive to develop or have a really high chance of making a lot of money. It’s a bit sad, but to reach their goal of a 30% increase, they’ve had to cancel some big projects – games like Rare’s Everwild, The Initiative’s Perfect Dark, and Zenimax’s Project Blackbird, all of which had been in development for almost ten years! It’s a tough decision, but they seem to be aiming for safer bets now.

Microsoft will release its next earnings report on October 29th. Before that, on October 24th, the latest Halo game – a major title for Xbox – will be revealed during the Halo World Championships.

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2025-10-23 15:41