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Xbox just had its worst quarter in years
Microsoft’s latest quarterly results show Xbox gaming revenue falling again, making it the division’s weakest quarter for several years. The decline matters because it comes despite Microsoft’s wider business continuing to grow strongly, underlining the pressure on Xbox’s console, game sales and subscription strategy.
Gaming revenue fell year on year, with both Xbox hardware and content-and-services income declining; the latter includes game sales, Game Pass and cloud services. The comparison was also difficult because the equivalent period last year benefited from major first-party releases, while Microsoft expects further pressure on Xbox content and services and hardware revenue.
In short
- Xbox recorded its weakest quarterly performance in years.
- Hardware and content-and-services revenue both declined.
- Microsoft’s wider business grew despite Xbox’s downturn.
Explained simply
Xbox is one of three major gaming consoles in the market, alongside Sony's PlayStation and Nintendo's Switch. Microsoft makes money from selling the physical consoles, selling games to players, and running subscription services, most notably Game Pass, which charges customers monthly for access to a large library of games.
Revenue fell across all three areas this quarter. Console sales declined, as did income from games and subscriptions, which is particularly important because Game Pass has become central to Microsoft's gaming strategy.
This matters because Microsoft's wider business is performing well, yet the gaming division has seen revenue decline. The company expects the gaming division to face further revenue pressure in coming quarters.
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