A new report has outlined that Microsoft wants Xbox to hit higher profit margins, with the goal for the gaming division to hit a profit margin of 30%, a number which is well above the industry standard. The target has resulted in Xbox canceling several different projects, raising both its console and subscription service prices, and cutting thousands of jobs over the last 24 months.
According to Bloomberg‘s Jason Schreier and Dina Bass, Microsoft’s Chief Financial Officer, Amy Hood, has reportedly set a target to achieve 30% “accountability margins” across the company, including Xbox.
As revealed in the report, the target of 30% is significantly higher than the industry standard for the video game industry, with past averages ranging between 17-22%, according to S&P Global Market Intelligence.
In 2023, Microsoft reported a mere 12% profit margin for its gaming division, with S&P Global Market Intelligence estimates revealing that the industry, on average, has not gone past 22% for at least since 2018.
In July 2025, this new target by Microsoft saw the highly anticipated Perfect Dark by The Initiative canceled – a project that was reportedly in development for around seven years. Its cancellation saw the shutdown of The Initiative studio. Rare’s Everwild, another project that was in development for around seven years, was also canceled around the same time.
In an internal memo obtained by Insider Gaming from Xbox CEO Phil Spencer, the cancellations were due to the “focus on strategic growth areas.”
In the last two years, Microsoft has seen several high-figure layoffs, with Xbox also being impacted.
What do you think of Xbox’s new internal target of 30% profit margins? Do you think it can be achieved, or will we continue to see Xbox canceling projects, raising prices, and laying off its employees? Let us know on the Insider Gaming Discord server.
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If Jason Schreier said it, you know its not true.
Besides, he has had a major bias against Microsoft leadership due to political differences for many years now, so why is any self-respecting “news” outlet letting him publish on Microsoft at all?