Microsoft has been forced to address a widespread claim suggesting the company is suffocating Xbox with an unrealistic 30 percent profit demand. According to the tech giant, the narrative is based on a misunderstanding of its broader financial goals.

In recent weeks, Microsoft has been at the center of intense discussion due to layoffs, budget cuts, and price increases. Many analysts quickly linked these controversial decisions to a supposed requirement for Xbox to achieve a 30 percent profit margin. Over the weekend, speculation escalated to the point where some commentators described Xbox as being in a state of financial free fall, prompting Microsoft to deny the claims publicly.

The confusion originated from a Bloomberg report quoting Microsoft CFO Amy Hood, in which a 30 percent figure was mentioned. This number was widely interpreted as a strict profitability target imposed specifically on Xbox, rather than a company-wide financial benchmark, which is what Hood was actually referring to. Given Bloomberg’s reputation, the phrasing fueled rumors suggesting that Xbox’s turbulent year was the direct result of chasing an unattainable margin.

The concern was understandable. A 30 percent profit margin would far exceed industry norms, where most major video game companies operate between 17% and 22%. Had such a target been real, it could have forced significant budget reductions, jeopardized certain projects, and limited the operational freedom of Xbox leadership, including Phil Spencer, Matt Booty, Sarah Bond, and Craig Duncan.

No, Microsoft Is Not Forcing Xbox to Reach a 30 Percent Profit Margin

CNBC investigated the situation and spoke directly with Microsoft representatives, who firmly denied the existence of any Xbox-specific 30 percent profit mandate. While ambitious goals are expected across all divisions, the company clarified that the figure in question applies to Microsoft as a whole, not exclusively to its gaming business.

That said, Xbox has undeniably endured a challenging year. Thousands of jobs were cut, and several high-profile projects were canceled, including The Initiative’s Perfect Dark, Rare’s Everwild, and ZeniMax’s MMO project codenamed Blackbird. Microsoft also confirmed that the annual Xbox Wrapped event will not take place this year due to budgetary constraints, a decision many initially attributed to the rumored profit pressure.

It remains unclear whether Bloomberg will issue a clarification or follow-up to its original report. Microsoft has stated it will continue to update the media if necessary, reiterating that Xbox remains focused on game development and long-term projects, without being driven by an artificial and rigid profit target.

Source: 3djuegos