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According to an internal Gaming CSA (Customer Service Area) slide deck, the Xbox games division had an accountability margin of $1.5 billion for the first 9 months of FY22 (July 2022 - March 2023). So what exactly is an accountability margin?
In testimony from the FTC trial, Xbox gaming CEO Phil Spencer explains:
Q: On the other side we have Sony with PS5 and a very analogous hardware subsidy. Sony's gaming P&L runs at lower GM and AM percentage margins than our gaming business, even though they have 2 times the console installed base.
GM means gross margin, right?
Gross margin percentages.
Q: And AM means accountability margin?
Accountability margin percentage, yes.
Q: Is that like profit?
That's the percent of your revenue that you keep in profit.
According to our findings, Xbox gaming had a 12% accountability margin (AM) for 9 month period in FY22. However, in the aforementioned testimony, Spencer says that "the Xbox business today runs at a single-digit profit margin."
Comparing this number with the other Big 3 players isn't exactly straightforward. The accountability methods may be different. We're not entirely sure how Microsoft calculates its accountability margin, but the closest comparisons we have are PlayStation's $1.419 billion in operating income, which represents a 7% margin, and $2.977 billion in net profit from Nintendo, which represents a strong 25% margin.
Read more: https://www.tweaktown.com/news/93375/xbox-profits-revealed-in-new-ftc-leak/index.html
Last edited by Ryuu96 - on 20 September 2023
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