Xbox recorded another weak quarter, with revenue from content and services such as Game Pass falling 10 percent and hardware sales dropping 13 percent, according to Microsoft's fourth-quarter earnings report. The decline comes as Microsoft's cloud and AI operations continue to expand rapidly, highlighting a growing divide between the struggling gaming division and the rest of the company's business. It follows a "reset" plan announced weeks earlier by Xbox head Asha Sharma, which included major layoffs and the spinoff of four games studios, among them Compulsion Games and Double Fine Productions.

Microsoft's overall revenue reached $90 billion, driven largely by its cloud business, which grew 27 percent to $59.3 billion, while its productivity division, covering Microsoft 365 and LinkedIn, rose 14 percent to $37.8 billion. Microsoft 365 Copilot surpassed 30 million paid seats and Azure revenue topped $100 billion for the first time. Xbox is also cutting Game Pass prices while testing free, ad-supported cloud gaming, even as console prices are set to rise by $100 or more from 1 August; Microsoft's Windows OEM and devices segment also fell 7 percent amid weaker PC demand.