- It was previously rumored that Microsoft had forced a 30% profit margin for Xbox.
- Obsidian boss confirms and says that this is the reason they had to launch games on PS5.
- Because of underwhelming Xbox console sales, this was the only way to meet targets.
Back in October 2025, a report surfaced that claimed that Microsoft is targeting a 30% profit margin for its Xbox products. The industry average is around 17-20%, and is generally reserved for companies doing really well.
That hasn’t been the case with Xbox, and Microsoft debunked this, too. However, Obsidian Entertainment has confirmed that the 30% profit margin is indeed real, and it has pushed Xbox to launch games on PS5.
Why it matters: Because Xbox’s revenue growth had become nonexistent, and PS5 is dominating the market, to achieve this unreal profit margin, Xbox Studios had no choice but to release their games on Sony’s console.
Talking to Bloomberg, Obsidian boss Feargus Urquhart discussed the studio’s recent projects and the implications of being an Xbox Studio. He confirmed that the 30% profit margin has indeed been implemented.
He said that Grounded 2 was a big hit, but The Outer Worlds 2 and Avowed failed to meet expectations. And when big-budget games fail, the huge profit margin seems even more unrealistic.
Urquhart further stated that the key to achieving this is to make creative, smaller-budget games with quicker development cycles. This happened with some critical hits like Hi-Fi Rush, Grounded 2, and Pentiment.
But this gives us a very clear answer to why Xbox had to port games to PS5. With failing Xbox sales, it would’ve been too hard to meet sales targets, so this was the only clear way forward for Team Green.
What are your thoughts on Microsoft’s 30% profit margin pushing Xbox to release games on PS5? Let us know your opinions in the comments or join the discussion at the official Tech4Gamers Forum.
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News Reporter
Abdullah is an avid gamer who primarily plays single-player titles. If you can’t find him anywhere, he’ll probably be at his desk playing The Witcher 3 for the millionth time. When he isn’t playing games, he’s either reading or writing about them.
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