Microsoft has released its financial reports for the quarter ending June 30, 2022, and while overall results were respectable given the impending economic collapse, the Xbox division of the company fared worse than other business units.
Microsoft’s fiscal year runs from the beginning of July to the end of June. Overall, Microsoft’s revenue climbed by 12 per cent year over year in Q4 2022, which was less than anticipated than the previous quarter’s 18 per cent growth.
While this was happening, gaming revenue fell 7% year over year, with hardware sales falling 11% and Xbox game and subscription revenue falling 6%. Despite this, Xbox Game Pass subscriptions continued to climb (perhaps as a result of a $1 for three months deal that ran during the quarter). Microsoft has not given a specific amount for the increase.
Surprisingly, Microsoft CEO Satya Nadella claimed that the Xbox Series X/S has now outsold the PlayStation 5 for three straight quarters, despite a double-digit decline in Xbox hardware revenue.
This illustrates the significant impact hardware manufacturing constraints are still having on the industry since the Xbox Series X/S topped the charts for next-generation consoles, not because of its great sales, but rather because a PS5 was practically impossible to find.
Microsoft attributes the decline in revenue in the software and services segment to lower player engagement and monetization in first- and third-party games, which appears to be a covert admission that Halo Infinite, the game the company probably hoped would sustain the Gaming division for the majority of 2022, is underwhelming.
The following quarter will probably witness another fall in the “mid-single digits” for Xbox revenue, according to Microsoft CFO Amy Hood.
Although many in the tech and entertainment sectors are struggling as we move into the post-pandemic slump, it’s difficult to avoid feeling a little let down by Xbox’s underwhelming sales considering the enormous sums of money Microsoft has invested in (or will invest in) firms like Bethesda and Activision Blizzard. Even with all the money being spent, it appears that enhancing the Xbox brand will remain an ongoing long-term project.
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