Microsoft executives have been expecting the Xbox division to achieve 30% profit margins—almost double the industry average—since 2023

Xbox Series X/S and Elite Series 2 controllers.

Microsoft's last two years have been marked by the layoffs of more than 10,000 workers, repeated development studio closures, and countless game cancellations—a relentless series of bloodletting and downsizing, made only more dire by the preceding consolidation campaign that saw swaths of the games industry brought under the corporation's gaming division.

Thanks to new reporting from Bloomberg, we now have a clearer idea of the motivation for Microsoft's current gaming strategy—if it can be called that. According to sources familiar with the business, Microsoft executives have been pressuring the Xbox division to achieve profit margins well in excess of industry average.