Microsoft Forcing Xbox to Hit 30% Profit Margin, Resulting in Aggressive Practises

Microsoft is reported to be forcing its Xbox branch to hit above-average industry profit margins, with an aggressive goal of 30 percent. This goalpost has been the driver for Xbox’s recent practices, resulting in game cancellations, price hikes, and layoffs over the past two years.

Bloomberg‘s Jason Schreier and Dina Bass recently reported that Microsoft’s Chief Financial Officer, Amy Hood, has set high expectations for Xbox following the acquisition of Activision Blizzard. With $69 billion USD (around $96 billion CAD) to recoup, Hood has set a target to achieve 30% “accountability margins.”

As the report details, target margins of 30 percent are largely higher than industry standards within gaming. Averages typically range between 17 and 22 percent, according to S&P Global Market Intelligence. As of 2023, Microsoft had a much more tangible 12 percent profit margin for Xbox, according to the market intelligence group.

Over the past two years, however, Microsoft’s gaming division has undergone a metamorphosis, chasing the new margins. As a result, Microsoft has laid off over 15,000 employees in 2025 alone. Cutting off redundancies after the Activision purchase, 10 percent of its total workforce has been removed over the year.

One of the biggest hits to Xbox’s portfolio this year was the cancellation of The Initiative’s Perfect Dark. Despite numerous trailers and having been in development for a reported seven years, Perfect Dark was scrapped alongside other projects like Everwild from Rare.

This summer, Microsoft has also been aggressively hiking up the price of its Xbox Series X and Series S consoles, as well as restructuring Xbox Game Pass. This month saw Xbox Game Pass Ultimate rise in price by $10/month in Canada. While refining the two more entry-level tiers, Xbox Game Pass Ultimate’s price rose by 50%, and now costs subscribers $33.99/month.

It’s clear that Xbox leads such as Phil Spencer, Sarah Bond and co. are left balancing the chequebooks for Microsoft as the company continues to prioritize investors and top brass. Microsoft CEO Satya Nadella is reported to have been given a hefty salary of $96.5 million USD, a 22 percent raise from last year, as Microsoft’s business is considered to be booming with investments in AI. However, anti-consumer practices and steep price hikes may only result in long-term shedding of Xbox’s identity.