Xbox hardware revenue fell 14% last quarter, and Game Pass and third-party sales dipped too
Xbox is still shrinking, slowly. Microsoft posted its results for the quarter that ended September 30 (the first quarter of its 2027 fiscal year) on Wednesday, and Xbox brought in $5.379 billion, down from $5.508 billion a year earlier, per Microsoft’s earnings release. That’s a 2% drop overall.
The breakdown
- Hardware revenue: down 14%.
- Content and services: down 2% (down 1% in constant currency). Microsoft said that was driven by declines in third-party content and Xbox Game Pass, partly offset by growth in first-party content, DayOne reports.
Still no Game Pass number. Microsoft again didn’t update Game Pass subscriber counts. The Verge notes the last figure it shared was 34 million, more than two years ago.
What Xbox’s boss said. Xbox CEO Asha Sharma said PC platform revenue grew by double digits this quarter, and that “console sales remain constrained by supply, with more demand than consoles available,” per The Verge. She said Microsoft is working to get more consoles to players, including through an expanded refurbishment program.
What’s next. On the earnings call, CFO Amy Hood said hardware revenue should decline year over year again this quarter. She expects content and services to grow in the “mid to high single digits,” helped by the timing of first- and third-party launches, with growth strongest this quarter before slowing later in the year, per DayOne.
Some context. This comes days after Xbox said Call of Duty passed $40 billion in lifetime revenue, and in the same week as reports of Microsoft’s voluntary exit offer to staff, with Xbox eligible.
PPR take: A 14% hardware drop is rough, though Sharma is pointing at supply, not demand. The Game Pass dip is the number I’d keep an eye on.