Microsoft is pushing Xbox studios to hit higher profit margins, leading to job cuts and game cancellations, report claims

It has been claimed that Microsoft is pressuring its gaming division to achieve a massive 30% profit margin in a move that has resulted in widespread layoffs, project cancellations, and major price increases.

The details:

• As reported by Bloomberg, the “accountability margins” were implemented in late 2023 by Chief Financial Officer Amy Hood. The 30% profit margin target massively exceeds the video game industry's average profit margin, which has ranged between 17% and 22% in recent years, according to S&P Global Market Intelligence. It's worth noting that Xbox has typically operated between 10% and 20% profit margins over the past six years, and that 30% is rather rare to see unless a company has had a standout year.
• It’s said that the demands are directly responsible for Microsoft’s decision to cancel multiple Xbox projects over the summer, including Rare's Everwild, The Initiative's Perfect Dark reboot, and ZeniMax Online Studios' Project Blackbird. The scrapping of the aforementioned projects also resulted in mass layoffs, with the shuttering of The Initiative also leading to job losses at Crystal Dynamics.
• Microsoft has also raised the prices of Xbox consoles and services in an attempt to increase profits. In 2025 alone, the cost of Xbox Series X/S consoles has risen significantly on two occasions, and Game Pass has seen a massive price increase of up to 50%, sparking backlash among players.
• The pressure to achieve these margins has also impacted the company’s priorities, with Xbox’s shift to multi-platform first-party releases and a focus on smaller, cheaper-to-produce games. Back in July, Hood revealed that Xbox’s operating income rose 34% for the quarter due to "continued prioritization of higher margin opportunities.”