Bloomberg: Xbox profit margin just 3%, Major Layoffs next month.

[Kyuu]

Sephiran said:

Xbox has proven that the classic console model of full exclusivity and based on selling first party software in big numbers is superior in generating profits compared to the Xbox model (Full first party multiplatform releases on consoles, PC and cloud and subscription revenue).

Imagine how much more profits Xbox would be generating today if franchises like Halo (That used to sell more than Zelda) also managed to sell 30M+ copies in the modern era like Zelda managed with BOTW. While IP from other companies increased their sales potential during the last 15 years, Xbox big IPs peaked in sales during the Xbox 360 era instead.

What use is a subscription model if they only manage to mostly retain previous subscribers? That means you are in a trap where you spend more and more cash on content every year to pretty much the same amount of paying subscribers. So the cash coming in remains the same, while the cash they spend increases, you can't square that circle in the long run.

Xbox and Microsoft have a plethora of issues, the worst of them are the complete lack of exclusivity and the declining quality of their original big IP's (Forza Horizon is the exception, hence the excellent sales). But X360's later years, Kinect fad, and the poor Xbox One launch also contributed to the brand's downfall. They messed up aganst Playstation and accelerated PC's growth, and now it's super difficult to bounce back. They also seem to have problems managing their studios and keeping budgets reasonable: layoffs, studio closures, cancelled projects left right and centre.

GamePass has actually been losing millions of subscribers. So it's getting worse than stagnation.