Xbox Faces “Utterly Unrealistic” Financial Goals That May Impact Division Performance

Challenges Continue for Xbox Amid Financial Pressures

The ongoing difficulties within Xbox are underscored by recent revelations regarding Microsoft’s financial expectations. Reports indicate that Chief Financial Officer Amy Hood has imposed what many are calling “utterly unrealistic”financial metrics on the gaming division, which could prolong the struggles the company faces in its gaming sector.

Over the weekend, notable gaming journalist Jez Corden shared insights on X, highlighting discussions about Microsoft’s financial strategies for Xbox. This analysis suggests that the troubling circumstances leading to recent layoffs are likely to persist. The Verge’s Tom Warren further weighed in, asserting that the current financial targets reflect the new landscape of the Xbox business, particularly in light of the recent Activision Blizzard acquisition. Warren contended that, without this significant deal, the division would be experiencing a revenue decline, compounded by the fact that the Game Pass strategy has yet to yield expected returns.

Microsoft CFO Amy Hood has given Xbox an utterly unrealistic financial requirement that is going to continue hurting the division. This isn’t over.

— Jez (@JezCorden) July 5, 2025

I don’t think it’s unrealistic, it’s just the reality of the Xbox business after the ABK acquisition. Without that deal Xbox revenue would be down, and the Game Pass gamble hasn’t paid off yet

— Tom Warren (@tomwarren) July 5, 2025

Impact on Game Development Studios

The recent wave of layoffs has had a profound effect on several prominent development studios within Microsoft’s gaming umbrella. For instance, Turn 10, the studio behind Forza Motorsport, has experienced a reduction of over 70 employees, transitioning its focus to support the Forza Horizon franchise.

Additionally, Rare faced significant setbacks, including the cancellation of its Everwild project. The Initiative, tasked with rebooting the classic Perfect Dark series, has also been entirely shut down. ZeniMax Online, known for The Elder Scrolls Online, was similarly affected by the abrupt cancellation of its upcoming MMORPG—a project that Xbox head Phil Spencer had previously expressed enthusiasm for during a play session in March.

Moreover, other partner studios, such as Romero Games—co-founded by the iconic DOOM creator John Romero—also faced closure following the cancellation of their planned first-person shooter, illustrating the far-reaching implications of these financial adjustments.

As the gaming industry evolves, the future of Xbox remains uncertain. Stakeholders will be closely monitoring how these financial targets impact not only employee morale and studio operations but also the overall trajectory of the brand in an increasingly competitive marketplace.

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