In the very same report in which Jason Schreier of Bloomberg reinforced rumours that a new Halo game is going to be revealed this week, he dropped another massive bit of news: Xbox is being pushed to achieve a ludicrous 30% profit margin.
According to Schreier, his sources from within Microsoft and Xbox have told him that since 2023, Microsoft Chief Financial Officer Amy Hood has issued a demand that Xbox aims for 30% “accountability margins,” a term used by Microsoft instead of profit margin.
This, Jason says, is why Xbox has been cutting jobs, raising the price of Game Pass and shutting down studios.
He does go on to say that his sources told him not every team is expected to hit these margins, “but many Xbox developers and groups have been presented with the new target.”
Schreier’s sources also told him that prior to this, Xbox was not given any specific targets and “were largely told to focus on making the best games possible without worrying too much about finances.”
As we know, though, the Xbox brand has been struggling ever since the Xbox 360 was replaced with the Xbox One.
In early July, Jez Corden of Windows Central tweeted out that Amy Hood have given Xbox a “unrealistic financial requirement”. He later revealed in an episode of his podcast in Summer of this year that he had heard about a 30% requirement but had not been able to verify it, and hoped it was “hearsay.”
30% is a frankly huge ask for even the biggest and best of the gaming industry. S&P Global Market Intelligence reports that the video game industry’s average profit margin has ranged between 17% and 22% in recent years. Xbox has typically hovered in the 10%-20% range over the past 6 years or so. In 2022, court documents revealed a 12% margin.
It’s not impossible. Capcom notably hit a whopping 39% operating margin in financial year 2025. FromSoftware even managed an insane 60%, but that was almost entirely because of Elden Ring’s momentous success.
Another example is Nintendo, whose currentl operating margin is sitting at around 24%.
But the best example is PlayStation, the main rival of Xbox. In Q1 of FY2025, the company reported a 16% operating margin. Keep in mind, this is during a time when PlayStation also reported that the PS5 has made more profit than every other generation of PlayStation before it put together. Their console is selling well, and even though they aren’t churning out exclusives, people are spending a lot of money on buying games for it. So if they can’t pull it off as a much leaner operation, how can Xbox?
While 30% is technically achievable, I don’t see Xbox being able to pull this off, unless that number is only being applied to a few highly specific teams and departments. Otherwise, Xbox is a huge brand trying to operate as a platform holder, a publisher, a developer and a subscription-service operator, all at the same time.
If Schreier’s sources are accurate, it goes a long way toward explaining Xbox’s seemingly erratic decisions over the last couple of years.
