Bloomberg reporter Jason Schreier broke the news that Microsoft has been forcing Xbox to achieve a profit margin of 30% in the past two years, which is much higher than the industry average. The pursuit of profits has led to frequent price increases, the elimination of multiple games, large layoffs and changes in corporate strategy.
Most developers' average profit margins range from 17% to 22%, according to estimates from S&P Global Market Intelligence. Previously exposed court inquiries showed that Xbox’s profit margin in the first nine months of fiscal year 2022 was 12%.
S&P Global Market Intelligence analyst Neil Barbor confirmed to Bloomberg that 30% profit margins are typically only achieved by "really successful issuers." Xbox clearly didn't have such a goal in the past, as anonymous sources revealed that Microsoft gave the team ample space to make the best game they could without worrying too much about funding.
That philosophy has changed markedly over the past few years, with Microsoft increasingly pushing Xbox to consider financial concerns. Coincidentally, the past few years have been exactly the years since Microsoft's large-scale acquisitions of Bethesda and Activision Blizzard. It is obvious that Microsoft's violent acquisitions are causing unexpected problems...
