Reports from October 2025 had indicated that Xbox was facing quite a bit of pressure from Microsoft to raise its “accountability margins” by 30 percent. According to Windows Central’s Jez Corden, there are now documents that have been “verified by proven sources,” noting that there are “a range of options” that are being considered to achieve this goal by 2030. These options include potential cost-saving measures like, for example, cutting backwards compatibility for Xbox One and Xbox Series X/S with future console hardware. There are also discussions about “evolving to be more software-based vs. hardware-based.”
A notable part of the current issues faced by Xbox as a whole, according to the report, is the general lack of console hardware being available in the market. In his report, Corden wrote that the “aspirational” profitability metrics led to the company sacrificing hardware stocks by essentially ordering too few units. This meant that, despite there being demand for Microsoft’s current-gen console hardware, there wasn’t any way for consumers to actually buy one. This is also important since the upcoming Grand Theft Auto 6 is expected to further drive up hardware sales, and a lack of Xbox Series X/S consoles on store shelves will likely play a major role.
The subject of the 30 percent “accountability margins”, which are essentially Microsoft’s internal way of referring to profit margins, first came to light back in October. The same mandate has reportedly led to the company raising the prices for its Xbox hardware, as well as Game Pass subscriptions. The mandate has also had far-reaching effects, including the closure of studios and the cancellation of several in-development projects. At the time, the report compared the gaming industry’s average profit margin as sitting between 17 and 22 percent, while Xbox’s had fallen by between 10 and 20 percent. The margin target was seemingly set by Microsoft CFO Amy Hood.
In a statement, a spokesperson for Xbox has said that the 30 percent target isn’t universally applied to all companies under the Xbox banner, and as such, not all projects are expected to hit it.
“We look at the business as a whole, balancing creativity, innovation, and sustainability across a diverse portfolio of offerings,” they said. “As with any creative business, sometimes that means making hard decisions and stopping work on things that are no longer working for a variety of reasons, and shifting resources toward the projects that are more aligned with our direction and priorities.”
In the meantime, after quite a bit of backlash from its user base, Xbox announced that it is reducing the price for its Game Pass subscription. However, as a notable side-effect, new entries in the Call of Duty franchise will stop appearing on the service on day one of their release. “Our players cover a wide breadth of geographies, preferences, and tastes, so while there isn’t a single model that’s best for everyone, this change responds to a lot of feedback we’ve gotten so far. We’ll continue to listen and learn,” said Microsoft in its announcement.
Microsoft is also getting ready to reveal more details about its next-generation console, dubbed Project Helix, with a game development update this week.
