The loudest ≠ the most profitable.
My brain exploded the other day. I double-checked several times, read the last three years of reports (damn all that tedious paperwork), and worked out what's what. There's something to tell.
The setting.
On the wave of Phil Spencer's departure from the position of "chief Xbox meme" — they hired some new AI-progressive girl, doesn't matter — a gamer howl went up. That's it, the end of Microsoft, they've nailed their own coffin shut.
Phil was great, but I'd call him a hostage of the one-man-figurehead paradigm, where a single person answers for everything a company does. A public face, highly visible, gave almost forty years of his life to Microsoft, a wonderful career. At 58 he had, in principle, done it all — for gamers and for the company. Time to rest. Especially since the wind of change can no longer be ignored: it blew away Phil and his people, and all-new ones were installed.
So, the head of the division responsible for Xbox and gaming in general either left or was left. And?
The conflict.
The main igniter of gamer backsides is the fact that the girl — the new one, replacing old Phil — is not a gamer in any sense at all. A pure business person, young, Indian, and moreover AI-progressive: right then, ship the oars, SLOP AWAITS US EVERYWHERE.
People have fantastically forgotten that Phil, while one of the brightest faces at Xbox, had no direct relationship with the developers (Microsoft currently has ~30 studios under it). The man in charge was Matt Booty, and he was the one you actually sorted things out with. Booty stayed, and in fact strengthened his position — and of course nobody is going to let a young, effectively figurehead executive steer the real questions.
The point.
I decided to check how much all this noise actually matters to MS. I mean, you don't move people in leadership positions every year if it's working; many thousands of people depend on your decisions. Twitter is exploding with outrage — what's the real financial charge behind this drama? If tomorrow gamers say "we're not friends any more" and stop buying games from one of the biggest IP owners, stop buying the hardware, boycott everything — what does MS lose? Will they backpedal and bring the familiar faces back?
…5%. Five (!) percent of revenue.
Roughly five percent is the entire yield from ~30 studios, five publishers and around twenty releases in 2025 alone. Every release at a $50 price point. Yes, you can say Windows sells even worse (it brings the company 3–4%), but Windows as a product has been upgrading free to each new version since 7. Crudely, a person who bought Windows 7 seventeen (!) years ago never paid for their OS again. All Windows revenue is new laptops with it preinstalled.
And do you know what actually feeds MS? Server solutions, cloud and 365. Narrowly specialised, subscription-based models — which is to say almost the entire till, over 70%.
And do you know what can match the profit of thirty game studios grinding themselves into dust every day?
LinkedIn. That thoroughly pissed-on sliver of a social network for praising your own achievements, which can't even compete with a Facebook that's stuck in the 2010s. Even that garbage brings MS noticeable money, though supporting it takes considerably fewer people than the entire game-making staff.
Five years ago, during Covid, the Gaming line's yield was around 1%. And five years ago, for context, there was a Covid boom in entertainment spending; '21 would be the fattest year of the decade, an especially joyful time for game studios.
In other words, everything we get from MS — the box, Game Pass, the unconditional funding of companies like Double Fine, ZeniMax, Blizzard, Obsidian — is an act of mercy. Compare the profit percentages with their main Japanese competitor and it becomes clear: MS never made a serious bet on this. For them it's a reputational thing, PR, whatever you like. But not a substantial business asset.
