Microsoft wants more money from its Xbox division. According to a Bloomberg report, he has set a goal for the Xbox division’s profitability to reach 30%. This is much higher than the gaming industry average. Typically it ranges from 17 to 22 percent. To get closer to this goal, the company began to do sudden steps – layoffs, cancellation of long-term projects and release of games even on competing platforms.
The change in approach began back in the fall of 2023, when Microsoft’s finance department began to become more involved in game development decisions. We saw the result: the cancellation of projects that had been in development for many years (for example Everwild, Perfect darkness, Smuggling or Project Blackbird). Some studios had to lay off some staff to reduce costs, and the Initiative studio was closed.
Releasing games on competing consoles should also help achieve greater profits. Previously, this would have been unthinkable, but today we are faced with Microsoft games on Nintendo Switch and PlayStation 5, where, for example, Indiana Jones and the Big Circle it even worked better than on the Xbox itself (but that’s affected by Game Pass) and Forza Horizon 5 was a great success. The goal is to maximize revenue from games, regardless of the platform on which they are released.
Apparently, Microsoft can’t afford to experiment in games. Instead of risky projects, he focuses on cheaper games with higher income potential – that is, games that pay for themselves faster and have long-term profit potential. According to internal information, changes may also affect the Xbox hardware, where new directions for development are reportedly being considered.
In the short term, this strategy is paying off for Microsoft. In July, the company announced that its Xbox division’s operating profit rose 34% in the quarter ended June. At the same time, management claims that the goal is not to limit creativity, but to find a balance between innovation and sustainable profit. Even if it means canceling games that Microsoft Gaming CEO Phil Spencer recently talked about in superlatives. But whether he is still the one who calls the gaming division is a question. After purchase King of Blizzard by Activision The management of the entire Microsoft began to speak out more about the functioning of the Xbox.
Source :Indian TV
