Microsoft’s Q3 gaming revenue down by 4%, and Xbox hardware revenue dropped by 30%

Despite revenue increases from Microsoft’s cloud services and server products, it appears that its gaming division has seen a decrease, except for its content and service revenue.

The details:

• Microsoft has released its third-quarter financial report for the fiscal year 2022-23, revealing that the company generated $52.9 billion in total revenue between January 1 and March 31, resulting in a net income of $18.3 billion. This represented an increase of 7% and 9%, respectively, over the same period in the previous fiscal year. Analysts had predicted $51.02 billion in revenue for the quarter, according to CNBC.
• Microsoft's gaming division, which includes Xbox, saw a 4% decrease in revenue, bringing in approximately $3.59 billion versus $3.74 billion in FY 2021-22. Despite the decrease, analyst @DomsPlaying pointed out that this is still the division's second-highest third quarter, trailing only last year's figures, which were its highest revenue outside of the holiday season.
• Xbox hardware revenue has dropped by 30%; however, content and services revenue has increased by 3%, with the growth of Xbox Game Pass being a significant reason for the increase, which was also higher than analysts' expectations.
• In February, it was reported that the rival PlayStation 5’s sales had spiked in Europe, whereas sales of the Xbox Series X/S had decreased by 11%. It appears that Microsoft now needs to focus on ensuring that there is a constant supply of consoles as well as releasing games notable enough to shift the consoles now that Sony's hardware shortage is no longer a problem, with titles such as Spider-Man 2 and Final Fantasy XVI on the way.

More Microsoft news:

• The Competition and Markets Authority (CMA) has blocked Microsoft's acquisition of Activision Blizzard in the UK, citing concerns about the company's current control over the cloud gaming market as a suitable reason to prevent the deal.
• After decades at Microsoft, Halo veterans Joseph Staten and Frank O'Connor have left Xbox and 343 Industries. Staten is now a creative director at Netflix Games, but O'Connor's plans are unknown. Several high-profile 343 Industries employees have left in the last year, following numerous reports of mismanagement at the studio.
• Management is allegedly "upset" at the current state of Xbox, with Tango Gameworks’ Hi-Fi Rush reportedly underperforming in sales despite critical acclaim. It’s believed that the game’s shadow launch on Game Pass may have cannibalized its sales.