Xbox’s shifting strategies have been all over the place recently. According to earlier reports, Microsoft is now aiming for a 30% profit margin with the Xbox brand, which has led to multiple cancelled projects, rising hardware prices, and more.

This report initially came from the very reliable journalist and insider Jason Schreier, who has now returned with more insight on the subject. Addressing the situation, the journalist says that the target, despite seeming very intimidating, is not all too unrealistic.

Jason Schreier recently appeared on 404 Media and discussed Xbox’s situation at length. He noted that the 30% profit margin target for the company is not too unreasonable, particularly because Xbox’s studios now publish their games on PlayStation.

He used a game with a budget of $100 million as an example, stating that making $130 million for such a game would not be completely impossible. However, in Xbox’s case, the presence of Game Pass complicates the math a bit, making the entire situation more interesting.

“It’s not an unrealistic target. It’s just that for a lot of games and companies, it’s not something that they had to think about.”
-Jason Schreier

Jason Schreier also explained how this target would impact the future of Xbox’s first-party teams. He admitted that this shift would impact smaller releases like Double Fine’s Keeper, with such games being very unlikely to achieve profit margins as large as 30%.

Ultimately, he emphasized how this target would shape the future of Xbox’s games. Studios like Double Fine must now develop games with the 30% target in mind and plan for a more profitable release as opposed to creating titles that appeal to niche audiences.

This is important since a studio like Double Fine has always leaned in the latter direction, something Microsoft likely did not mind when acquiring the team many years ago. Aside from Double Fine, every other Xbox studio will be impacted by this new target in a similar manner.

Perhaps the gaming giant will rely on tentpole IPs like Halo and Gears of War more frequently moving forward. All three major IPs, Halo, Forza, and Gears, are set to receive new entries next year, so 2026 should prove to be a solid test for whether Xbox’s new profit margin goals are realistic.