Microsoft has released its latest earning results for FY23 Q3 and Xbox's gaming revenue is down by 4% year-over-year.
Although Xbox's content and services revenue grew by 3% - with growth driven once again driven by the Xbox Game Pass service, hardware revenue has taken a hit, with a decline of 30% compared to the previous year.
Microsoft linked the hardware decline to supplies. This also happens to be the lowest quarter of Xbox hardware revenue since the tech giant launched the Xbox Series X|S consoles in 2020, as highlighted by The Verge.
Here's what the official document had to say, noting how the previous year had "increased console supply":
"Xbox hardware revenue declined 30% (down 28% CC) on a prior year comparable that benefited from increased console supply..."
Despite this decline, Microsoft CEO Satya Nadella says the company set third-quarter records in terms of monthly active users and devices - reaching nearly $1 billion in revenue from these subscriptions.
For this same period, Microsoft banked a whopping $52.9 billion, up by 7% year-over-year.
Microsoft is predicting growth in games revenue for the next quarter and there are obviously more first-party releases on the way like Starfield and Forza Motorsport. Next month also sees the arrival of Arkane Austin's release, Redfall. Of course, Microsoft is seemingly on the cusp of closing the Activision Blizzard acquisition as well.
What are your thoughts about these results? Tell us in the comments below.
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[source microsoft.com, via theverge.com]
The most important metric is going to be subscriptions and player count since people can subscribe without even buying hardware. I am sure the narrative will be that Xbox is on the brink of collapse, but I think we all know 2022 was a very slow year and upcoming exclusives will increase hardware sales.
Well sales for the PS5 are down as well. That's why the PS5 is everywhere. At least it is here in CT. And at this point, Game Pass subscribers is the priority for Microsoft, not console sales. I don't really care. I have both consoles. Now I just need a Switch so I can play Tears of the Kingdom.
They’re totally pumping the brakes on everything until ABK is approved. Looking weak and throttling everything they can until they jump through legal hoops.
If Xbox made these exclusives / decisions I would be a happy man
Third person bad boys video game
Samurai Jack third person
Spawn , blade , black Adam , black panther
John wick ( max Payne/ matrix ) style
Black samurai third person
Def jam vs Roc nation fighting game
Third person StarCraft game
Doom spin-off third person to compete against silent hill or dead space
Purchase lionsgate films , dreamworks and tidal Music to combine with gamepass
Merge with asus and lock down capcom exclusives if Microsoft can’t purchase them ( lost plant )
Make japanese anime shows / movies with Xbox exclusives
Acquire Ubisoft , kalypso , creative assembly , paradox , wb games , embracer group
In my opinion, Microsoft should increase the pumping of exclusive games or discount the price of consoles because competitors have made great names for themselves and it is difficult to convince the public otherwise. Microsoft has the best budget among the rest and it must take risks, at least in the American market.
Let's wait for Redfall to launch and then we will find out if the games are the reason or there is another reason
Maybe it's different in other regions, but it's not hard to find a Series X here, and it's never been hard to a Series S. Now, all we can do is play armchair analyst, but there's a question to beg: is there any real reason to buy a Series X or Series S now except for Game Pass? And is Game Pass as much of a system-seller to the casual consumer now Sony has theirs? I know if I didn't have either console, right now if I was looking at getting one, it would be the PS5. There's little if anything to be missed by going that way.
Side note: I was buying a turntable yesterday, and while I was at the checkout another customer enquired about his receipt. The clerk went "Oh, that's just telling you to pre-order the upcoming Final Fantasy game." Stuff like that has an impact on people.
@Romans12 Wut? PS5 sales are up, in some regions as much as 300%. You can see them because the stock shortage is over for that console.
They gotta be putting them chip's towards xcloud servers vs making consoles right? I wonder if looking at the roadmap internally they saw that they had a drought coming for software and decided to build up the server's before focusing on making more consoles when the games actually start rolling out. ABK they were confident about but always was a risk so i don't think they would have decided solely on that.
End of the day they rich as ***** still and Sony hopefully keeps giving them hard competition to protect our wallets. If Jimbo isn't lying for a change and all them Sony customers leave the platform in droves they might become arrogant like Sony.
This only proves why Xbox is moving away from the 30 years old console centric model. Unlike Sony, xbox doesn't want to rely entirely on hardware sales to exist. Sony business is 100% dependable on the PS, (they NEED it to sell subscription, software, online engagement, even PSVR and the rumored upcoming remote handheld), the xbox is becoming wider with the ecosystem and Game Pass at its center, if one area struggles the ecosystem remains healthy. That is the nature of the companies, Sony is a hardware company, Microsoft is a software company, simple like that.. Even though xbox sold 30% less consoles and barely sold any 1st party, their revenue only dropped by 4%; Why?
More people are buying Xbox content and services, especially Game Pass
They made almost $1 billion from subscriptions and broke records for active users and devices
Where did those player come from? Well.. PC/Cloud players like myself and soon mobile, thats why they want ABK. None of that means they are ignoring console, unfortunately 2022 was dry on 1st party which are the console sales driving force. That is going to improve now they are dropping HiFi Rush, Minecraft Legends, Redfall, Starfield and Motorsports this year! These games will sell lot console and push 1st party sales.. but let's not forget Diablo 4 and CoD, those will be launching as 1st party and bring even better numbers!
I think this is their second best quarter for content and services. Which is why it’s only down 4^. The original forecast was a much larger loss than 4%z
@TheSimulator an epic wishlist 😉
Still seeing a series X in stores is rare around here but I just dont think MS cares about console sales TBH. GP subs is what they want and the console model is just a tool they half heartedly put out there.
I understand it because it's all about that money but I do enjoy a plastic box and the green cases lol.
I actually see more PS5 consoles in stores right now than xbox's, I sold my series x to a friend back when they were extremely hard to find and and picked up a series s this past black Friday for $250USD and couldn't be happier with that decision, I play it more than my PS5. The PS5 is a great system and playstation has fantastic exclusives but I think Jim Ryan is a complete dipshit. Xbox is only going up from here and they have continued to show it.
@GhanaViking Couldn't agree more. This will be quickly forgotten once the CMA make their findings today anyway 😅
@Moonglow 3% growth on services and content is pretty low, games pass is growing but slowing, it needs some marketing, I’ve only ever seen it mentioned on an EE advert. But they did lay off a large amount of marketing staff.
Microsoft don’t show figures for a lot of things, that helps foster negativity. They really need to do a good marketing push, and to be fair start remembering there’s a lot of gamers outside the US.
Probably just a spin to get the ABK deal closed easier.
But I will say this, it is funny seeing all people in the comments section talking about MS making a play for cloud gaming and not caring about console sales. How many of you are actually using cloud gaming regularly? Or better yet, as your only option? I have not yet seen a poll/survey where happy cloud gamers represented more than a couple of percents..
Can’t sell consoles if they don’t ship them!!!
When I purchased God of War Ragnarok last weekend, I noticed Smyths Toys had stock of ps5 and series s, but the Series X was out of stock. And on Amazon they only have the Forza bundle in stock, no standard series x. Thats here in the UK. I was kind of surprised tbh as I thought stock problems had ended
I hope starfield and forza motosport can buff those numbers... As this is not good news for us gamepass subscribers, if this model fail to make xbox on top certainly after ABK they definitely try to abondon the model or charge more for it
I thought Xbox would do better this gen and they are but they’re still miles away from PS5 and its sales. A lack of quality first party triple A titles is the main reason why in my opinion. I can’t see Redfall changing anything within the next month.
@Fenbops I don't think they will ever beat playstation any gen.
@Romans12 I bought a switch 3 weeks ago.
Long story short, I've been getting fit and switch Ring fit adventures seemed like a good option to work on my core and posture. Do not regret buying it! Great workout.
However as a gaming system (so far Mario maker 2, Zelda and tactics ogre reborn) the sharpness and clarity is unforgiveable. On a modern TV it looks worse than an xbox 360. Playable but blurry. On the xbox series x most games are buttery smooth, on the switch you have awful shadows, frame rate dips and its hard to bear with. Handheld mode isn't perfect but at least it has its benefits. Would not recommend a switch if you preferably game on a TV.
I've just bought xenoblade chronicles after all the positive acclaim and am waiting patiently for it to arrive. After buying online I searched for a deepdive in preparation. Digital foundry on youtube noted its 700p resolution with drops in the 500s. I mean wtf is that?
@GunValkyria I agree but I thought they’d get closer.
Don't give a stuff. As long as games I enjoy keep coming to Xbox I am good.
"But BBB if they don't keep making huge profits then you won't get your games"
Yup and I will re-evaluate my position if that happens at whatever future time that occurs. In the meantime I will enjoy the games that are in front of me now.
The harsh reality is, the Xbox is a media device now not a dedicated gaming console, excluding YouTube via TV and the console, most people have other devices to watch and consume other forms of media but if there isn't a top eye catching IP like let's say Spider-Man then people (especially kids) are not going to be running to you waving their money in the air, they need one big time instead of focusing on the subscription-xcloud route with games funded and developed on a budget, it's just like Disney+ & Netflix, they all become junk in the short term, most people only know & play "AAA" games, COD GTA & Fortnite and that's the problem.
@FenIsMightier in europe for some reason is nearly impossible to find a series X (while in 2021 and early 2022 was easy instead). It is really strange.
@Fenbops like you said it likely due to a lack of AA exclusives which is something ps owners enjoy pretty steadily also MS is laser focused on Gamepass and cloud gaming and PC so yeah Xbox is probably going to stay in third place for the time being
@themcnoisy I am aware of it being a stereotypical claim, but there is more to video games than framerate and shadow quality. Personally, I would forgive MS any such issue if they were to create and innovate something on level and scale BotW was in 2017./2018.
If you are after graphics and bleeding edge technologies, you should sell your Switch while you still can. (full disclosure, out of my 3 current gen consoles, NS is my favorite)
@FenIsMightier Well, they had a price drop for the GOW Ragnarok bundle. That's very rare for Sony. And I honestly do not trust Sony when it comes to numbers. They are always the leader, says Sony. I don't believe that anymore due to the panic that's going on with this big acquisition. Again, I own both consoles. But I think Sony's business practices are trash and not sure they are as ahead as they want people to think they are. Game Pass is worlds away from PS Premium as far as subscribers. In regards to consoles, I always see Series S, Switch and PS5's at my local Walmart and Target. Never the Series X though for some reason.
It's not all doom and gloom revenue from content and services - Xbox's biggest earning segment - was up 3% YoY (+5% in constant currency). When the whole industry spending has shrunk 5% YoY, and you haven't had tentpole releases. That's OK.
But the console sales are worrying and down significantly -30% YoY isn't good. Is the problem REALLY supply shortages as they suggest? Personally I don't buy it, availability doesn't seem to be the problem, it seems more a demand issue.
No, PS5 sales are NOT down, quite the opposite.
In fact after an exceptionally strong year of sales PS5 is now tracking ahead of PS4 as of this month - that was their fastest ever selling console.
They also just had a record month in February outselling any PlayStation console EVER for the month in the USA. Similar stories in EU and UK in recent months. There are some bonkers numbers in there like PS5 sales up 369% YoY in Europe.
TLDR: PS5 sales are way up.
Personally I don't buy it, it's availability isn't a problem and it seems more a demand issue
I know right, why would there be a demand for Xbox....it makes its owners sick with all sorts of terrible plagues 😅
@Sol4ris Not at all. I think it just comes down to games once again. They have the "worlds most powerful console" but they have little to show that. Show don't tell.
It's a shame as it's a great piece of hardware, Game pass is great, the direction they are pointing is great, but they just can't seem to get system selling games out consistently. Sadly it's the same old story, and that is reflected in these numbers imo.
Oh boy, no doubt @Dezzy and Co will have a field day with this news...😉.
Anyways, I'm sure things will improve once some of the big hitters get released, here's hoping.
@PsBoxSwitchOwner 3% is a shy growth, but only if you don't look at the context. Xbox didn't have any big 1st party release and was also relatively not aggressive in 3rd party AAAs day 1 games. Console sales are 30% down and for some reason It's also a service they are keeping at minimum marketing, for now.
If you take all these into account, a 3% growth is actually good and that growth is going to be very expressive this year with so many 1st party games, solid 3rd party day 1 releases and ABK going through
@themightyant the standard Xbox Series X is currently out of stock at Smyths, Amazon and Argos when I just checked. Some do have stock of the Forza Bundle, so they obviously are having some supply issues and have been for a few months. Our resident sales fanatic Dezzy has mentioned it a few times recently, of low or no stock on Series X. All the sites have plenty series s and ps5. This time last year it wasn't even possible to buy a ps5 at all, so having huge increases this year is to be expected
@Sakai From my understanding the only thing that is hard to come by is the XBox Series X on it's own, but ONLY because Xbox isn't currently supplying much of that SKU, they are supplying the Forza bundle SKU instead. That is a choice from Microsoft.
There is still in stock in all those places for the console, hence it doesn't seem to be a supply issue in my mind because it isn't sold out anywhere (at least in the UK).
@Moonglow Sorry replied to the wrong person. But I agree. 3% growth in a period with no major releases and while the whole industry has shrunk 5% is OK. Not great but ok. -30% sales console is worrying though, especially when the competition is selling record numbers also without tentpole releases.
@themightyant alot of people don't buy bundles and wait for the console to become available on it own. The same with ps5 last year, if you wanted to buy a bundle with tshirts, controllers and games you could get one. But alot of people waited until this year when normal stock was available and you could buy the console by itself without a mark up.
In other news:
ABK deal Blocked by the CMA due to Cloud Concerns. Seems like it's all over
@Cikajovazmaj I get that. I've been gaming since the Atari 2600. But on a big 4k TV, switch looks terrible.
Also there are a ton of indies on xbox which simply don't get the exposure of Mario etc so no one tries them. Opus, Immortality and age of empires 2 remastered are all great. Have you played them?
@Romans12 This couldn’t be father from the truth. PS5 sales are up ridiculous amount compared to last year because stock shortage is over.
@Sakai Sure but I think there is a big difference between a bundle a store is artificially creating with things people really don't want like t-shirts etc. while selling it way above RRP and the official bundles like this.
Ultimately if people aren't buying this because it is in a bundle that is Microsoft's fault for creating too many Forza bundles, which isn't sold out, but it still isn't a supply issue.
I don’t buy the stock shortage comments. They’ve been sitting at local stores by me for a while now. The issue is more clearly that Xbox simply doesn’t have “console selling” tier titles. With Halo Infinite having a bad reputation, the Forza Horizon fans already have the console. What else is there for casuals or newcomers of the ecosystem beyond Gamepass? You have more to play on PS with an arguably comparable gaming streaming service now. It’s been said a million times, but when you don’t release any big titles to sell your console for a full year while your competition releases multiple huge titles, do you expect to be on equal footing? Xbox needs to get back to the basics of making an exciting ecosystem to thrive. They did it for two generations before. They can figure it out again. Release big first party games!
I still love Xbox and gamepass, but I can see why it’s not selling. It’s a bit stale rn. Nintendo’s six year old system is selling more. Between sales and PS Plus, Gamepass isn’t such a differentiator. Then several games are running better on PS5. I am excited for the second half but MSFT needs to deliver….
@themcnoisy I played all the games you mentioned, but I don't feel like those are even highlights of GP. There are some extraordinary games on service, don't get me wrong.
But indies are on every platform, and they perform pretty much the same elsewhere. What gives Big N the edge is a playful approach to first-party games (neither MS nor Sony will spend 5 years making a playground like Tears of the Kingdom).
I mean that only makes sense when they don't offer new color options or memory options for something like the S & don't have exclusives dropping on a regular cadence.
@FatalBubbles Says who? Sony? lol. And this is 2023. Console sales are quickly becoming obsolete. It's like comparing album sales to Spotify subscribers. Not the priority. Subscribers - that's the money maker.
@Romans12 Sony has to report numbers to their shareholders. That’s not something you can lie about. Jail time for falsifying financial records…
Subscriptions are the deal for Xbox, not Sony.
@FatalBubbles Jail time for falsifying financial records? LMAO. Good Lord, how old are you? Wake up and welcome to America. And the future of gaming is not based on a physical item anymore, unfortunately. It's based on subscribers and cloud gaming. I honestly think Sony is angry for not doing these things first. Again, I have both consoles. I use them both for different reasons. PS5 for exclusives and Xbox for GP. No rebuttal please. I'm not trying to start a console war here. I'm done.
@Romans12 Yes, falsifying financial records is jail time, fines, etc. I’m 36.
@Romans12 "Says who? Sony? lol. And this is 2023. Console sales are quickly becoming obsolete."
says gamesindustry.biz and pretty much every single tech and gaming site, the sales are soaring rn by 369%
if console sales are obsolete then it's even more impressive ps5 selling this well rn, quite a miracle
@FatalBubbles not only is it a crime and it has both fines and jailtime but every single investor can also sue the company, it'll be a legal nightmare for the company and something they can never recover from, especially since NO ONE would invest in a company that commits Financial statement fraud
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