Microsoft reportedly ordered its Xbox division to boost profits to an unrealistic level

"Sources told Bloomberg that in 2023, Microsoft implemented an "across-the-board goal" of 30 percent profit margins, which the report says Microsoft calls "accountability margins" internally. As Bloomberg 's Jason Schreier reports, this target, which was set by Microsoft's Chief Financial Officer Amy Hood in fall 2023, is far above the recent industry average of 17-22 percent quoted by S&P Global Market Intelligence. Schreier adds that Xbox's own average in the last six years is between 10 and 20 percent."

"S&P Global analyst Neil Barbour told Bloomberg that Microsoft's 30 percent target is the kind of margin "usually reserved for a publisher that is really nailing it." This is despite its gaming division only landing at 12 percent in the first nine months of 2022, as quoted in the report. A Microsoft spokesperson told Bloomberg that it views individual games and projects differently with regards to what constitutes success, adding that it sometimes has to making tough decisions, including ending development on games, so it can shift its resources toward the projects that are "more aligned with our direction and priorities.""

"The new profit targets were introduced in the same year that Microsoft finally its $68.7 billion acquisition of Activision Blizzard, landing it hugely popular franchises such as Call of Duty and Diablo. Back in 2020 it ZeniMax, the parent company of Bethesda, which means that long-running series like The Elder Scrolls and Fallout also"

Microsoft implemented a 30 percent across-the-board profit-margin target for its gaming division in 2023, labeled internally as "accountability margins." That target is well above the industry average of 17–22 percent and above Xbox's six-year average of roughly 10–20 percent. The gaming division recorded about 12 percent profit in the first nine months of 2022. Microsoft reduced approximately 3 percent of its global workforce in May, with the gaming division hit and several titles subsequently having development ended or cancelled. Microsoft stated that projects are judged differently and resources are shifted to priorities. Microsoft completed the $68.7 billion acquisition of Activision Blizzard and previously acquired ZeniMax.

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