Microsoft Denies Setting 30% Profit Margin Target for Xbox Games
Microsoft has dismissed claims that it imposed a 30% profit margin target on its Xbox gaming division, pushing back against reports that linked the figure to recent layoffs and project cancellations.
The clarification was included in a new CNBC report, which cited discussions with Microsoft about several narratives that have circulated around the company over the past year. CNBC noted that earlier reporting, including a Bloomberg article, had suggested Microsoft’s finance leadership set a 30% margin expectation for Xbox as part of broader company-wide “accountability margins.”
According to those reports, the target was attributed to Microsoft’s Chief Financial Officer, Amy Hood, and was said to have contributed to increased pressure on the gaming unit. Industry insiders later echoed similar claims, arguing that such a goal was unusually aggressive for the video game sector, where typical profit margins are estimated to range between 17% and 22%.
However, Microsoft told CNBC that the widely cited 30% figure was inaccurate. While the company acknowledged that it sets challenging performance goals across its businesses, it denied mandating a specific 30% profit margin requirement for Xbox.
The denial comes during a turbulent period for Microsoft’s gaming division. Over the past year, Xbox has undergone multiple rounds of job cuts and cancelled several high-profile projects, including Perfect Dark from The Initiative, Rare’s Everwild, and an unannounced MMO project at ZeniMax, codenamed Blackbird. More recently, Microsoft also confirmed that it would not release an annual “Xbox Wrapped” feature this year, citing budget considerations.
Despite these challenges, Microsoft maintains that decisions affecting Xbox are not driven by an inflexible profit margin mandate, as previously reported.
