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.
This is an interesting move by Microsoft! It will be intriguing to see how this impacts their gaming strategy and the overall market. Keeping a close watch on profit margins seems like a smart approach.
Absolutely! It’s definitely a bold strategy. It’ll be interesting to see if they adjust their game pricing or invest more in exclusive titles to meet that profit margin. Changes like this could really shape the gaming landscape in the coming years.