Microsoft’s latest financial report shows a varied performance in its gaming division. Although the acquisition of Activision Blizzard has notably increased total gaming revenue, Xbox console sales have continued to decline.
According to the report (thanks, Eurogamer), Microsoft’s gaming revenue increased by 51% compared to last year, reaching $1.8 billion. This growth is mainly because Activision Blizzard is now part of Microsoft. Xbox content and services revenue also increased by 62%, showing the positive financial impact of the acquisition.
The report also shows a significant 31% decrease in Xbox hardware revenue compared to the previous year. This decrease reflects an ongoing trend, similar to a 30% drop reported during the same period last year. Even the launch of a highly anticipated exclusive title like Starfield did not change this downward trend in console sales.
The earnings report doesn’t mention any updated subscriber numbers for Microsoft’s Game Pass service. This lack of information raises questions about how the subscription service is currently doing.
In March, the CEO of Microsoft Gaming, Phil Spencer, mentioned worries about the gaming industry’s slow growth. This and decreasing console sales may have influenced the company’s choice to release games on competing platforms such as PlayStation. Microsoft CEO Satya Nadella highlighted this change in strategy, stating that the company is bringing popular game series to Nintendo Switch and Sony PlayStation for the first time.
Despite the large financial impact of the Activision Blizzard acquisition on Microsoft’s overall operating income, the decline in Xbox console sales is a cause for concern. Microsoft will need to find new ways to boost its hardware sales and address this ongoing trend if it wants to remain a top player in the console market. The company’s decision to publish games on rival platforms suggests a potential shift away from a focus on consoles and towards reaching a wider gaming audience across different platforms.
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