Microsoft’s Profit Push Behind Xbox Layoffs, Cancellations, Price Adjustments, Report Says

by Ahmed Hassan October 24, 2025

written by Ahmed Hassan October 24, 2025

Key Takeaways

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Microsoft is aiming for higher profit margins, particularly for Xbox, following the acquisition of Activision Blizzard in 2023. The target accountability margin is set at approximately 30%.
To achieve this goal, Microsoft is implementing cost-cutting measures, including layoffs, game cancellations, and adjustments to Xbox Game Pass prices.
Projects are being prioritized based on cost efficiency or potential for substantial revenue generation.
The focus has shifted from growing the Xbox ecosystem and Game Pass subscriber base to maximizing profits, which may involve project cancellations and team restructuring.

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Microsoft’s Xbox Shift Towards Maximizing Profits and Cost-Cutting Measures

According to Bloomberg, Microsoft has been pushing for higher profit margins across all divisions, including Xbox, since acquiring Activision Blizzard in 2023. Microsoft has set a target “accountability margin” of approximately 30% for Xbox, a goal that may be difficult to achieve given that game console profits typically range from 17% to 22%. This new profit-driven approach may explain recent layoffs, game cancellations, and adjustments to Xbox Game Pass prices. Bloomberg reported that Xbox teams are being urged to prioritize projects that are either inexpensive to produce or likely to generate substantial revenue. To meet Microsoft’s corporate expectations, Xbox is also increasing subscription and development kit prices, focusing on multiplatform releases, and implementing other cost-cutting measures. Consequently, this represents a shift from Xbox’s traditional long-term strategy of growing its ecosystem and Game Pass subscriber base to a focus on maximizing profits, even if it requires project cancellations and team restructuring.

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