By As soon as the Activision Blizzard agreement concluded…
Bloomberg’s consistently reliable gaming reporter Jason Schreier (together with colleague Dina Bass) has released an in-depth report on Xbox, detailing how Microsoft is now instructing the division to produce “higher profit margins” following its significant purchase of Activision Blizzard.
The article states that Microsoft executives “have established a universal target of 30% ‘accountability margins'” – a phrase that Microsoft utilizes internally “according to sources knowledgeable about the company”. Bloomberg also mentions that “based on assessments from S&P Global Market Intelligence”, the typical profit margin in the gaming sector is “between 17% and 22%”, according to recent data.
The report further indicates that its insiders claim that previously, developers at Xbox “were not required to meet specific numerical objectives”, and that this profit margin goal was instituted “in autumn 2023 by Microsoft Chief Financial Officer Amy Hood”. This timing aligns perfectly with the acquisition of Activision Blizzard; that agreement was finalized in October 2023.
Schreier points out that this alteration in profit goals was immediately succeeded by some significant and consequential decisions made by Xbox – including the gradual introduction of multiplatform releases, numerous studio shutdowns, several major cancellations of projects and beyond. Microsoft provided a statement to Bloomberg in reply to this reporting, which we will include below:
“We evaluate the business as a comprehensive entity, harmonizing creativity, innovation, and sustainability across a varied lineup of offerings, […] As is the case with any creative enterprise, sometimes this necessitates making tough choices and ceasing work on initiatives that are no longer effective for various reasons, and reallocating resources towards the projects that align more closely with our direction and priorities.”
This certainly clarifies much of what we’ve witnessed from Xbox over the past few years, as Microsoft has consistently integrated ABK into its gaming portfolio. We can only anticipate where things progress from here, as the team begins to prepare its next-gen hardware for launch in the upcoming years.
So readers, what are your thoughts on this report? Please keep it respectful and share your views about Xbox in the comments below.
[source bloomberg.com]
Ben is a News Writer at Pure Xbox, and enjoys action, racing, and good old-fashioned shooting in any Xbox game he can acquire. When he’s not holding an Xbox controller like it’s vital for survival, Ben spends his time enjoying music that’s far too vintage for him, watching football on television, and likely dining somewhere.