Want to read Slashdot from your mobile device? Point it at m.slashdot.org and keep reading!

 


Forgot your password?
Close
typodupeerror
Microsoft XBox (Games)

Microsoft Demands 30% Profit Margins from Struggling Xbox Division (bloomberg.com) 91

Posted by msmash from the call-of-duty dept.
Microsoft has set a 30% profit margin goal for its Xbox gaming division, Bloomberg reported Thursday, well above the video game industry's average of 17% to 22%. The target, implemented in fall 2023 by CFO Amy Hood, represents a sharp departure from Xbox's previous approach of allowing developers to focus on making quality games without specific financial constraints. Xbox historically maintained profit margins between 10% and 20% and reported a 12% margin for the first nine months of Microsoft's 2022 fiscal year.

The division has responded by canceling several projects that had been in development for more than seven years, including Everwild, Perfect Dark and Project Blackbird. It has also eliminated thousands of jobs and raised prices. In 2024, Xbox began releasing most of its games on rival Nintendo and Sony platforms. The heightened scrutiny comes as Microsoft prioritizes investment in generative AI while overseeing a gaming division that has struggled despite spending $76.5 billion on acquisitions.
This discussion has been archived. No new comments can be posted.

Microsoft Demands 30% Profit Margins from Struggling Xbox Division More

Microsoft Demands 30% Profit Margins from Struggling Xbox Division

Comments Filter:

  • this was entirely predictable (Score:2, Interesting)

    by Anonymous Coward
    Microsoft will often do a big acquisition to help a struggling division and the result is that the acquisition fails and the entire division is decimated. They also did this with AppNexus a few years ago. The irony is that if Xbox hadn't done the Activision acquisition MSFT could have sold off Xbox or even spun it off as an independent company but now it is too big to do anything with except let die by a thousand cuts. (The logic inside the company is "This is our one chance to have a huge success." The res

  • Didn't slashdot commenters tell me all gaming console price increases were tariff-caused, given the history of the industry?

    Are prices much more influenced by noisy management decisions and noisy government policies than simple supply and demand, as mainstream economists would have you believe?

    • Re:Don't tariffs cause all price inreases? (Score:5, Informative)

      by ArchieBunker ( 132337 ) on Thursday October 23, 2025 @09:33AM (#65745308)

      I work for a small electronics company and every day we're adjusting customer prices due to tariffs as they shift like the wind. Hell it affects me on the hobbyist level if I buy components for my projects. Once in a while at the grocery store I would buy a chocolate bar from a local chocolate company. This past Sunday I saw the price had risen to $5.99 for one bar! Last year they were $2.99. That's going to kill a small business.

      • Re: (Score:1)

        by DarkOx ( 621550 )

        That is the point. Long term de-globalization has to change the mix of products on the shelf. Maybe the answer is they should start selling 'white-chocolate' or some other candy flavored with some form of domestic produce (creating domestic jobs down the line) instead of insisting on selling expensive imports!

        If champagne grapes don't grow in your region, switching to sparkling apple cider, is kinda the point here. Being recalcitrant and "saying see see muh chocolate bar costs more this isn't working," is

        • Re: Don't tariffs cause all price inreases? (Score:4, Insightful)

          by Malc ( 1751 ) on Thursday October 23, 2025 @10:09AM (#65745408)

          Why would you drink cider if you want sparkling wine? If your criteria is that you want a yellow drink with bubbles, fine, but that also doesnâ(TM)t sound like your average champagne drinker either.

          Itâ(TM)s like expecting somebody who wants a BMW will be happy with a Ford instead. Theyâ(TM)re more likely to just delay the purchase of the Beamer until they can afford it, and also have less money to spend in the local economy.

        • Re:Don't tariffs cause all price inreases? (Score:5, Informative)

          by aitikin ( 909209 ) on Thursday October 23, 2025 @10:35AM (#65745484)

          If champagne grapes don't grow in your region, switching to sparkling apple cider, is kinda the point here. Being recalcitrant and "saying see see muh chocolate bar costs more this isn't working," is rather missing the point entirely.

          [pedantic] Champagne is not a type of grape, it is a very specific region of France. Champagne as you're thinking of, is a sparkling wine only made in the aforementioned region, typically made with pinot noir, pinot meunier, and chardonnay grapes as the primary grape and various yeasts giving it its specific bubbles. So if a sparkling wine comes from anywhere other than Champagne, France, it is not champagne, merely sparkling wine. [/pendantic]

        • Re: (Score:2)

          by Anonymous Coward

          Good Sir,

          I must take quill to paper in protest of this new enthusiasm for walls, duties, and the narrowing of our markets under the noble banner of "domestic virtue." Shall we, who once tossed tea into the harbor rather than pay a petty tax upon it, now chain our own merchants to the dock and call it patriotism?

          Commerce, like Liberty herself, thrives upon the free winds. To bind her with tariffs and decrees is to suffocate the very enterprise that made our Republic flourish. What folly to think that prosper

          • Good Sir,

            I must take quill to paper in protest of this new enthusiasm for walls, duties, and the narrowing of our markets under the noble banner of "domestic virtue."

            The motivation for tariffs is winning political elections. For many centuries already, tariffs have proven to be a practical pathway to get elected. Whether they are good for the national economy, consumers, or some notion of national pride is immaterial.

        • The last century is littered with examples of nations with "truly self sufficient" economic policies and explicitly anti/deglobalization - they used to call it anti-imperialism but it was the same goals, same tools. Many were successful on those goals - drastically reducing imports, moving industry production into the country, etc. None succeed in keeping a competitive economy or sustaining (much less improving) quality of life.

          To be fair, the old social-democrat experiments did not try the "lets change the

        • Re:Don't tariffs cause all price inreases? (Score:5, Insightful)

          by skam240 ( 789197 ) on Thursday October 23, 2025 @11:27AM (#65745660)

          Why is buying things from other countries bad? Our standard of living is much higher then it was before globalization. Other countries make low cost goods with their low cost labor and we benefit from those cheaper goods while they buy our stuff that they can't make themselves. We even get stuff we can't produce in meaningful amounts in this country. It's been a pretty good arrangement for us.

          Going to an "everything made in America" economy would most definitely lower our standard of living as we wouldn't be able to afford anywhere near as much stuff paying for first world labor to make it

        • Will you be eating all your stored grain and canned fruits/vegetables this winter? What a dumb take.

        • If champagne grapes don't grow in your region, switching to sparkling apple cider, is kinda the point here.

          Yes because people infamously love having others tell them what they can and can't consume.

        • Almost zero coffee is grown at n the USA. Only a couple of small farms in Hawaii can grow it.

          All coffee and tea is imported. Have you started breaking your coffee.habit yet? That is a huge part of regionalization. Wait until conservatives find out no more coffee and tea.

        • That is a stupid point.

          Demand for certain consumer products cannot be managed domestically. It makes no sense to tax items with little to no domestic competition.

          I can get behind protecting domestic industries to a point (they still need to show they can be competitive with govt intervention) but throwing up blanket taxes in items like coffee, cocoa, citrus is just hurting Americans because there is no way all demand can be satisfied domestically.

      • Re: (Score:2)

        by jsonn ( 792303 )
        To be fair, chocolate is one of the few products where the price explosion is largely only cause indirectly by US trade policies. Indirectly in so far as global warming is of course also created by the USA.
      • BUT... on the plus side, the 96% of the worlds population who don't live in the USA are not subject to the tariffs

        There will be probably be a good market smuggling iPhones from Canada to the USA soon, guess that's one way to stop fentanyl from being smuggled, make iPhone snuggling more profitable.
    • The majority of tariff costs have not been passed on the consumers, companies have been eating them. American companies not foreign companies.

      There's two reasons for this. First Trump's national sales tax was anticipated and companies bought up supply in advance. They have run out of that supply and Christmas is going to be very very expensive. Not just toys but everything. Because Trump put a sales tax on all the things you buy and all the things that companies you do business with by.

      Now that the

      • Re: (Score:1)

        by DarkOx ( 621550 )

        Well the inflation numbers are out now (10/24) and they only just barely above 2%. It is almost like your assumptions were and are wrong or something....

    • I can't read the paywalled article, but the summary doesn't say anything about raising prices. What it does talk about is reducing costs by cutting languishing projects. For games to be in development for 7+ years is no way to run a business.

      • "It has also eliminated thousands of jobs and raised prices."

        From the summary. And from the enormous counter-reaction to all the raised prices, of games, consoles and gamepasses.

        One of the best selling games in recent history, which has made its developers very, very, rich, was first announced six years ago, meaning development had already been ongoing at that point. Hollow Knight Silksong. Evidently, making excellent games is a great way to run a business, even if it takes seven years.

        • What I'm saying is the new goal to target 30% profit margins (sure, why not?) might or might not be accomplished through further price increases. I know they already did raise prices, and I there's been some pushback and even reductions of announced sky-high prices for upcoming games by other companies. Microsoft doesn't dominate gaming and they don't have the power to arbitrarily increase profits by jacking up prices.

    • Re: (Score:1)

      by Anonymous Coward

      Didn't slashdot commenters tell me all gaming console price increases were tariff-caused

      I don't read all slashdot comments, but I read a lot of them and I don't recall ever reading any comment saying that all price increases were caused by tariffs.

      If you read that tariffs cause price increases and spun that round in your brain to price increases are caused by tariffs, and then further confused yourself by adding an "all" to your mixed up misinterpretation of what you read, then you could have certainly told yourself that.

      Also when you say "slashdot commenters" told you, do you mean you read it

    • Re: (Score:2)

      by gweihir ( 88907 )

      Both. Tariffs force price increases and then many just increase more than needed. So directly tariff-caused and indirectly tariff-caused (combined with greed) on top of that.

  • Is that why they are putting prices up on everything across the board? I don't think that will work out to well.
    • it works for Apple.
      • That's kind of scary when you think about it. Corporations are abandoning the general consumer in favor of the top 10% or so.

        Even for something as simple as entertainment it's becoming unobtainable. TVs are still cheap but I can't imagine that'll last forever.

        There was a guy who runs casinos in Las Vegas commenting on why Las Vegas seemed so empty and he said that it didn't matter because he can make more off of one high roller dropping $2 million dollars on a gambling spree then all the middle clas

        • TVs will remain cheap so long as they can infest them with adware, and data collection routines, including but not limited to always on cameras and microphones.

    • Big tech has decreed: their pet robots must be fed.

      And some one has to pay for that. Hah, of course that's you.

      Power is most obvious, but they will extract the cost of the robots from their customers whether they use them or not. (But please use them. Did you know they get horny now?)

      And their customers need to pay that bill. And you may as well use that horny robot you're paying for... No, I meant fire your CS and make your customers talk to it.

      So now you get to pay more in order to have a frustrati

    • Re: (Score:2)

      by gweihir ( 88907 )

      Well, MS thinks they are invulnerable these days. Look at the insecure and barely functional crap they dare to put out. Look at their cloud getting hacked (a deadly sin). I really do hope they are badly misjudging the market, but they may not be. At least for a while still.

  • making it. they need a lot more zeros in their bank accounts. Man they're failing left and right. why don't they just arbitrarily say everyone in every department has to make 100% profits? I guess they're not really committed to maximizing revenue streams? I mean are they really committed to dynamic manipulative algorithmic driven capitalism? I have my doubts! obviously they need to stop doing more good things for the user and do a lot more bad things that make money in the short term.

  • Only way to stop it is to kill it. When will greed be outlawed? Like drugs or guns or other actual cool shit?

    China is gonna eat America's lunch.

    • China is gonna eat America's lunch.

      100% correct. The country is too busy worrying about a trans person using the bathroom. I'll leave you with a quote from Lyndon Johnson.

      “If you can convince the lowest white man he's better than the best colored man, he won't notice you're picking his pocket. Hell, give him somebody to look down on, and he'll empty his pockets for you.”

      • Re: (Score:1)

        by DarkOx ( 621550 )

        And Democrats have clung to that advance and double and tripled down on that exact race baiting strategy in every election and political era since.

        A good example of why they should never be tolerated in polite company.

        • Re: (Score:2)

          by skam240 ( 789197 )

          And Democrats have clung to that advance and double and tripled down on that exact race baiting strategy in every election and political era since.

          Oh please, like conservatives aren't constant drama with every group that one is supposed to hate to be a conservative If conservatives stopped with the constant politics of fear of the "other" Democrats wouldn't have a platform to stand on in this context.

      • Re: (Score:2)

        by gweihir ( 88907 )

        Nice quote!

    • Re: (Score:2)

      by higuita ( 129722 )

      is already doing that

      for USA, profits above all, even if it cost quality or market share
      for China, build a stable market is above all (ie: can run without or low profits for long time, as long as it growing or have constant demand, profits can come later when there is less competition), cheap low quality was the beginning, they slowly are getting higher quality and getting more market

      unless the company goal returns to be happy customers, leaving behind the goal of happy shareholders and stock market, USA wi

      • Re: (Score:1)

        by 0123456 ( 636235 )

        When you financialize your entire economy, you end up with piles of money but no actual economy.

        China was heading that way but Xi jailed a few oligarchs and reduced the power of the financial mafia. That can't happen in America because the oligarchs own all the politicians.

        • Re: (Score:2)

          by gweihir ( 88907 )

          Sad as that is, it seems Xi is doing something right. Probably for the wrong reasons, but it still works.

      • Re: (Score:2)

        by gweihir ( 88907 )

        If you are right about Chinese culture (I have no idea), then the US is toast. As soon as tech progress slows in an area (and slowed a lot in IT, even if many desperately try to pretend otherwise), long-term stable supply and services is what consumers and enterprises will buy.

    • Re: (Score:2)

      by gweihir ( 88907 )

      The worst forms of greed are outlawed, like anti-trust and price-gouging. But in the land where Mammon is the highest god, these laws do not get enforced.

  • It's time. (Score:5, Insightful)

    by johnnys ( 592333 ) on Thursday October 23, 2025 @09:43AM (#65745334)

    Don't pay them to enshittify your time. Put away the game.

    Read a book.
    Go outside.
    Talk to your significant other.
    Cook a meal.
    Live!

    • Love your sig line -- somehow appropriate for this topic & thread.
      The comment was good too. :)

    • Or play other, better, video games! Let's not vilify video games here and pretend the medium is where the problem lies.
    • This is Slashdot, we are nerds.

      Read a book.
      Program your own game.
      Scan the electromagnetic spectrum.
      Design and build a computer.
      Live!

      FTFY - now I have to go and take my pizza out of the microwave.

      • I like games. I've played a lot of them.

        But once you start getting the hang of reality, it's more addicting than any game. When you win in the real world, you win in the real world.

    • I find myself spending a lot of time with old consoles and computers that I still have from before games started having online components, lately. They were fun then, and they still are.

      • I find myself spending a lot of time with old consoles and computers that I still have from before games started having online components, lately. They were fun then, and they still are.

        Spot on. I'm on a SNES binge, and once my new C64 comes in (apparently next month), I'm sure I'll be able to spend all my free time reliving my childhood from the 80's and 90's. I think the most modern game I actually enjoyed on the xbox was Peggle.

    • Don't pay them to enshittify your time. Put away the game.

      Read a book. - God no, boring as fuck.
      Go outside. - It's 11pm and we have a severe weather warning in effect. Your suggestion is actively dangerous to my health.
      Talk to your significant other. - She's doing what she likes doing - playing video games.
      Cook a meal. - I already ate today. Just how long do you expect me to cook and for which meal? It's not going to take my all night to prepare breakfast.

      Live! - NOW WE'RE TALKING. Living is doing what you like and what brings you joy. I'm off to go play a video

    • Re: (Score:2)

      by antdude ( 79039 )

      What is book, outside, significant other, cook, and live? /s

  • There's but one response to a 50% profit increase demand: Enshitify your app. Coming soon to your XBox.

  • Gachas and loot chests and cosmetics, oh my!
  • It's never enough for any of these people.

  • One more recent text in the big tech religion is Measure What Matters by John Doerr.

    One thing the book tells you to do is set goals high enough that getting 70% of the way there is still success. So.. if xbox is already has a 21% profit margin, the OKR methodology of the book would tell you to set your goal at 30%.

  • They can demand all they want (Score:3)

    by MpVpRb ( 1423381 ) on Thursday October 23, 2025 @10:29AM (#65745460)

    Customers will respond appropriately

    • Unfortunately, customers have show they are controlled by habit or FoMO: Demand is slightly inelastic. The small number that leave will be offset by the higher revenue from the madding crowd that wants more distraction from their jobs and political irrelevance.
  • Capitalism demands infinite growth
    • “Two things are infinite: the universe and human stupidity; and I'm not sure about the universe.” Albert Einstein
  • Has been trying to kill the gaming division since he got on.

    Gaming is a high risk high reward division. The razor blade model where you sell the console with a huge loss to make it back up in platform fees means that if you get your clock cleaned for a generation you lose billions.

    The holy Grail is of course what steam has where you don't have to sell the hardware at a loss but you still get the 30%.

    Steam though goes out of its way to promote games and not just a big ones that grease their pocket
  • they canceled perfect dark???? i will never buy another xbox product again in my life i wish nintendo had never sold rare can you imagine if nintendo still had rare how many incredible games could have been made????? instead of slop like viva pinata and the kinect games...
  • So they are squeezing a division that produces a product that customers actually line up for, and has tangible profits, instead of the money pit that has a -90% margin?
    • Having just left Microsoft, my perception was that they were starving the other divisions to go all-in on AI build out, which of course isn't producing any income currently. Which begs the question, what are the margins on your AI business, Microsoft? Ai loses a lot of money on every sale, but they make up for it in VOLUME!
  • There is no legitimate way to get to 30% margins. It will be commercial breaks with video ads in the middle of play and punch-the-monkey ads all over your Xbox menus.
    • No way to get 30% margins on hardware. But games have tiny marginal cost per unit, they should have 90% margins.

    • Re: (Score:2)

      by gweihir ( 88907 )

      You may manage for a while if enough people are locked-in. Abut after that you will be out of the market for a long time.

  • Why not demand 2,000% or 100,000%?

    These are just as likely as demanding 30%

  • Well that's just "good business." You pump up stock for the quarter so half of the board can cash out on inflated revenue figures. Who cares about "long term viability?" Get in, fire everyone, raise prices, kill R&D. PROFIT.

  • the floggings will increase until morale improves
  • Microsoft is trying to get out of the hardware business. XBox hardware pretty much sells at cost. The games, on the other hand, have extremely low marginal cost per unit sold. Sarah Bond is smart enough to let someone else sell the hardware (probably ASUS) and focus on the high-margin games themselves... which would make 30% margins easy.

Slashdot Top Deals

The absence of labels [in ECL] is probably a good thing. -- T. Cheatham

Close