Since acquiring Activision Blizzard King, Microsoft has been keeping a close eye on its gaming division. A relatively minor part of the American group at first, the Xbox brand is now run with an iron fist.
According to a new report from Bloomberg, Microsoft Corp. is asking its video game subsidiary to generate profit margins of 30%. This target is well above the industry average of 17-22%. These margins have recently been achieved through game cancellations, studio closures, thousands of layoffs, and general price increases.
It was Amy Hood, Microsoft’s chief financial officer, who set this course. This strategy runs counter to that initiated by Phil Spencer, the current president of Microsoft Gaming, who wanted to put less expensive and more innovative games in the spotlight. Now, the company is taking fewer risks and refocusing on sure bets such as Call of Duty, Forza Horizon, and Fallout.
The future of studios such as Double Fine (Keeper, Psychonauts), Compulsion Games (South of Midnight), and Ninja Theory (Hellblade) seems very uncertain.
