Inside Xbox’s Corporate Struggle: How Microsoft’s CFO Tightened the Reins on Gaming

Xbox’s recent string of unpopular moves — from mass layoffs to studio closures and rising Game Pass prices — has left fans and analysts questioning whether Microsoft still understands its gaming audience.

A new Bloomberg report now sheds light on what might actually be happening behind the scenes: a corporate drive for significantly higher profit margins.

Amy Hood’s Financial Overhaul

According to Bloomberg’s investigation, Xbox’s troubles trace back to Amy Hood, Microsoft’s Chief Financial Officer, who took over full control of the Xbox division in late 2023. Since then, Microsoft has reportedly set a demanding goal — to make Xbox operate at a 30% profit margin.

The article’s sources describe that target as “extremely difficult to achieve.” By comparison, the average profit margin in the global gaming industry hovers between 17–22%, with Xbox historically sitting closer to 10–20%. Internal reports from Microsoft’s 2022 fiscal year showed Xbox reaching only around 12%, which is well below this new threshold.

Profitability Over Creativity

The report suggests that the push for higher profit margins explains nearly every controversial decision made by Xbox over the past two years. Sources claim the division has been under “immense financial scrutiny,” with leadership prioritising short-term profitability over long-term creative investment.

The result has been a chain reaction of strategic shifts:

Mass layoffs and studio closures, reducing operating costs.
Game Pass and hardware price hikes, boosting revenue per user.
Lower-budget projects replacing riskier, ambitious titles.
Cross-platform releases, bringing Xbox exclusives to PlayStation and Nintendo to widen income streams.

Behind it all is reportedly a growing frustration within Microsoft that its billion-dollar acquisitions — Bethesda and Activision Blizzard — have yet to deliver the expected financial return, especially as the company turns its focus toward generative AI ventures.

A Familiar Brand Under Corporate Strain

For fans, this revelation explains the tension between Xbox’s creative teams and Microsoft’s corporate goals. While the brand once built its identity around innovation and accessibility, Schreier’s report paints a picture of a division being reshaped by financial demands rather than player-first ambition.

Developers reportedly describe a new internal climate defined by budget constraints and caution — a stark contrast to the Xbox of the early Series X era, which promised risk-taking and experimentation.

Halo’s Role in the New Strategy

The Bloomberg report also hints at one of Xbox’s next major moves: a new Halo project expected to be announced this week. Insider speculation points toward a remake of Halo: Combat Evolved, aligning with Microsoft’s current strategy of leveraging nostalgia and established IPs rather than greenlighting bold, original projects.

If accurate, it’s a move that underscores the growing divide between corporate expectations and creative ambition and how Xbox’s future may be dictated as much by accountants as by game developers.