Microsoft denies Xbox is seeking a 30% profit margin

The company clarifies that it seeks profitability, but denies a specific figure as high.

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Over the past few months, the idea has spread that Microsoft’s video game division had set an ambitious internal goal: to reach profit margins of 30% on Xbox. The origin of this debate dates back to a report published in October by Bloomberg, which pointed out that this figure would be significantly higher than the industry’s usual average.

According to the report, industry margins typically range between 17% and 22%, while Xbox has historically fluctuated between 10% and 20% over the past six years. The supposed new internal requirement generated concern among players and analysts, particularly due to its potential relationship with project cancellations, price increases, and staff cuts.

Microsoft responds and clarifies its stance on Xbox profitability

Now, Microsoft has addressed these reports in statements to CNBC, directly denying that there is a specific 30% target. The company acknowledges that it sets challenging goals for its gaming business, but assures that this specific figure is incorrect.

In the original Bloomberg article, it was also mentioned that this supposed change in strategy had been driven by the end of 2023 by the financial director Amy Hood, marking a shift from previous years, when such clear numerical targets were not demanded from the Xbox teams. Microsoft, however, insists that this interpretation does not reflect the current reality.

Although the company has not wanted to specify what margins it considers acceptable, its response makes it clear that there is no official mandate to reach 30%. Nevertheless, the message confirms that Xbox remains under pressure to improve its profitability, a context that helps to understand many of the strategic decisions made in recent years.