Microsoft has faced significant turmoil in recent years, with over 10,000 employees laid off and multiple development studio closures as part of a strategy aimed at achieving a much higher profit margin. In a recent report, Bloomberg revealed that Microsoft executives expect its gaming division to hit a 30% profit margin—almost double the industry average.

This increased target was set by CFO Amy Hood in fall 2023, replacing the previous expectations with what is referred to as “accountability margins.” In contrast, the gaming industry average is estimated to be around 17% for 2024, a decline from 22% during the COVID pandemic years.

Leaked FTC court documents further indicated that Microsoft’s gaming division reported only a 12% profit margin during part of the previous fiscal year. Given the pressures to meet these ambitious goals, the company has engaged in drastic cost-cutting measures, raising questions about its long-term strategy and sustainability.

Interestingly, this push for profitability comes amidst significant expenditures, as CEO Satya Nadella is set to receive an unusually high pay package for the fiscal year, highlighting an apparent disconnect between executive compensation and the general performance of the gaming sector.