The Xbox gaming division is being asked to operate with a 30 percent profit margin, claims a new report by Bloomberg. This demand for an above industry average margin resulted in many of the decisions that have blighted Xbox in recent years, including job cuts, the cancellation of big game projects, and an increase in prices on hardware and services.
While the Bloomberg report states that not all projects at Xbox are being set this 30 percent profit margin brought in during 2023, sources have told the publication that many developers and groups have this target.
Bloomberg reveals that a profit margin of 30% is usually only found in a company having a tremendously good year, and this figure is way above the average. Since 2018 the highest average profit margin across the industry (according to estimates from S&P Global Market Intelligence) peaked at 22.1 percent in 2020 and dropped to 17.1 percent in 2024.
How will this affect the games and hardware from Xbox? Aside from the move to publishing across all platforms (something also being experimented with by PlayStation, but to a much lesser degree) and the recent price hike to Xbox Game Pass, Bloomberg’s sources have said that less costly games and games with higher revenue expectations will be prioritised.
Xbox has faced rumours over its next-gen hardware, but the division’s president Sarah Bond has just this week confirmed new hardware is still coming, and it’s going to be “a very premium, very high-end curated experience.” This has resulted in many expecting this new Xbox console to be significantly more costly to buy than previous generations.
Xbox provided a statement to Bloomberg:
“We look at the business as a whole, balancing creativity, innovation, and sustainability across a diverse portfolio of offerings. As with any creative business, sometimes that means making hard decisions and stopping work on things that are no longer working for a variety of reasons, and shifting resources toward the projects that are more aligned with our direction and priorities.”
