Xbox gaming revenue continues to decline as hardware sales struggle

Microsoft’s latest earnings report has confirmed another disappointing quarter for its Xbox division, with gaming revenue dropping amid a prolonged decline in console sales.

The details:

• According to Microsoft’s latest quarterly earnings report, its overall business remains strong, with company-wide revenue up 17% year-over-year to $81.3 billion due to the continued success of its cloud and enterprise services. However, its gaming division has moved in the opposite direction, recording a 9% decrease in gaming revenue for the quarter.
• The company reported that gaming content and services revenue, which includes Xbox Game Pass, game sales, and DLC content, fell by around 5%. Microsoft attributed the dip largely to tough comparisons against last year’s run of strong first-party releases, and it has warned investors to expect a similar performance in the next quarter for the same reason.
• Xbox hardware revenue remains a particular weak spot, as hardware sales have continued to decline, with income dropping for at least two consecutive financial years. The latest results note a roughly 32% year-on-year decline in hardware revenue, which will likely continue going forward.
• Despite the downturn, Microsoft is still betting heavily on Xbox’s subscription and ecosystem strategy. Xbox Game Pass continues to be positioned as the centerpiece of its gaming business, with the company opting to release its first-party games on rival platforms, including Fable and Forza Horizon 6, which are set to arrive on PlayStation 5 later this year.