Microsoft reported a 10% quarterly fall in Xbox content and services revenue, contributing to a 4% decline in its personal computing division to $12.9bn. The result follows major job cuts and studio changes, and highlights the pressure on Xbox as Microsoft says it is restructuring the gaming business for long-term growth.

Microsoft recently announced 3,200 Xbox layoffs, with 1,600 taking effect immediately, affecting teams including Bethesda and id Software; it also separated four studios, with Arkane Lyon potentially a fifth. Chief executive Satya Nadella said Xbox is being “reset” across its content portfolio, platform and operations, with Microsoft expecting the division to return to growth in fiscal 2027, while the wider company reported quarterly revenue of $90bn and cloud revenue of $59.3bn, up 27% year on year.