Xbox Is Predicting A Revenue Decline For The Start Of Fiscal Year 2026

Well considering the Xbox handhelds coming out and the bump in gamepass subs that should give and they would expect it to sell well over Christmas aswell I wouldn't be surprised by this id say there projection for Q4 2025 is bigger than Q4 2024 but I suppose the negative side gets more traction especially when it comes to Xbox!

Yeah this was always going to be the case. Every hot streak has a decline to follow. That will no doubt be followed up by a stellar year in 2026 and although this year will be hard to top, I can see them meeting and maybe even exceeding expectations for next year - given what we know is coming.

@Ricky-Spanish I would be very surprised if the rog ally increases subs as its a pretty niche product. I imagine existing users will pick it up more than new users.

Plus we really need to be clear that its not an xbox handheld. Its a Windows handheld with an xbox skin over it. Folks going into it thinking otherwise will get a bit of a shock otherwise.

Edit: hope that didnt come across argumentative, wasn't intended if it did buddy.

Rising costs (for everyone - inc us Gamers) and financial uncertainty due to global conditions (these 'Global' companies are affected by regional issues and politics - such as Tariffs, Sanctions etc and some regions are no longer accessible or have the cash to spend on 'leisure' activities) is likely to cause a 'slow down' in overall expenditure on Microsofts Gaming Products and Services.

I'm trying so hard not to mention Political events or decisions, but if you can't sell your products where you could before or your products are hit with Tariffs making them even more expensive, that is going to have an impact that Gaming companies will have to deal with, Its not their fault, but they still need to plan and or even restructure for, try to find a way to get through the tough times relatively 'unscathed'.

Its no point looking at just Gaming but trying to look at things more holistically. You lose a Market (regardless of the reasons), that has an impact, another region on the verge of economic collapse or rising inflation meaning all your free cash is needed on essentials (food, clothing, rent/shelter etc) so impact sales of Games. Despite the rationalisation across Microsoft, they still 'expect' their figures to drop which maybe more to do with the general state of the Global Markets than specifically MS or 'Gaming'.

Its likely why EVERY Big gaming company has made cuts, cancelled projects and/or sold off assets to get through these 'tough' times. Some in the west may well not be affected by events in the Middle East or Eastern Europe for example but Global companies are!

I hate to mention things outside of gaming on a gaming website that's focused on the Gaming bubble, but I also think it needs some acknowledgement as its clearly having an impact on the Global companies making, distributing and selling games/services.

A lot can happen in 6months, but if things don't improve Globally, then its likely this prediction will be accurate if not somewhat optimistic.

@Weebleman Time will tell with the handheld but considering the fact that the series s/x consoles haven't sold amazingly the chances are there will be a lot of new users not already in the ecosystem of Microsoft/Xbox simply because most gamers game elsewhere.
No worries buddy you didn't come across argumentive at all ✌️

This is all on nadella. Easily one of worst leaders in the industry today.

It's no surprise to see a decline in Microsoft. Nadella ONLY cares about cloud and making everything an unnecessary and overpriced subscription.

I used to purchase Office every release. And I ABSOLUTELY refuse to, or ever will pay for a subscription. So that's a sale Microsoft lost. Doubt I'm only one.

Nadella is single handed setting Microsoft up for failure and no way out bankruptcy.

@Ricky-Spanish The tone deaf delivery of Xbox One by Mattrick, really, really, really, hurt Xbox, and took the full blowing sails out of excitement, loyalty, and fun, for Xbox fans.

To this day Xbox never fully recovered.

@Kaloudz that new forza next year is all I need!

I think some of the comments are missing that this is a prediction of a decline for Q1 of 2026 and Q1 2026 is OCTOBER 30, 2025. This is how businesses do stuff for... reasons (idk). The earnings report that just came out was for Q4 2025. And this is year over year, so Microsoft is saying that compared to Q1 2025 (October 2024), Microsoft is expecting less consumer spending overall across all their services. That makes sense. @BAMozzy hey don't feel bad about it. None of us can ever truly escape the dreaded politics or reality of what's happening in the world. There's also nothing to get dramatic about when these are the facts. Compared to last year the global economy is facing a lot more challenges and as a result people have less discretionary income to spend on what's ultimately a hobby. Gaming is also just not pumping out as much compared to last year (last year really felt like all those games that got delayed by COVID were coming out). GTA VI probably would've changed these predictions if not for the delay. And prior to October Xbox doesn't have any huge releases. COD is a November title this time around and even Keeper and Ninja Gaiden would've been out barely a week (well not even that for Keeper). There's also no new hardware (the ROG probably won't be sold by October 30 (maybe pre-orders will be out) but regardless I don't think that'd be counted in gaming revenue; probably windows OEM revenue as it's an ASUS manufactured, distributed, and sold product; ASUS, not Xbox Or Microsoft)).

@GuyinPA75 It always comes back to that I agree that man completely destroyed the momentum after the 360 with that train wreck of a reveal the brand has never recovered!

@Ricky-Spanish I'm not sure Xbox would actually track it as their revenue. It'd probably just be a value added to Windows OEM. The ROG Xbox Ally is still a 100% ASUS produced device just with Microsoft's help, mainly on the software side. Microsoft probably cares less about raw sales and more about having an optimized proof of concept for their Xbox gaming mode. I thinn they want to make the Windows OEM more valuable and keep pace with valve whose now selling SteamOS to OEMs (and it both costs less than a windows license and gives a more optimized better performance gaming experience than windows). After the Xbox Ally launches, they'll bring the software updates to all handhelds. And I imagine further down the line we'll see more Xbox named windows gaming OEMs

I've said this a few times but in short, GTA 6 is the culprit for software related things.

So Q1 runs from August 1st through to October 1st, therefore, what does that mean for the release of the next Xbox? New rumours suggest that it will indeed be coming out next year, but surely, even if they follow their usual pattern and they release it in November (Q2) they will have opened up pre-orders prior to that, and possibly in or around September, meaning Q1. I guess, if the rumours are true, then for them to be seeing a fall in revenue in Q1 2026, then either they will open up pre-orders in October 2026, or they expect sales to be so dismal as to to not move the dial. It's probably the former, in fairness, but times are most certainly interesting...

In fairness, @Ricky-Spanish, it is Amy Hood who announced this prediction, and outlets are simply reporting what she said. Hood could have kept her council, and no one would have been any the wiser. I don't think people are being down on Xbox just because they are reporting what one of the Microsoft executives has said...

Sounds like their actions are finally starting to catch up with them. I knew this would happen, can't make your platforms undesirable and not eventually lose revenue on them.

@GuyinPA75 Yup I switched back to Mac after not buying their computers for over a decade because Microsoft has ruined everything I liked about Windows with the Windows 11 era. Apple includes all the Office software FOR FREE, NO SUBSCRIPTION REQUIRED. They also make it easy for me to setup an external hard drive for time machine backups, no need for cloud subscriptions on data heavy backups. I see no reason to stick with Microsoft anymore.

@beltmenot Forza is going to be insane. I really, really wish they'd set the location in Tokyo though. The amount of variety they'd get between city racing and country racing alone would be breath-taking.

They’ll need to fire some more developers then.

@WildConcept6 They'll be getting revenue from it as it is a Licenced Product and will know how many units get sold and can probably track what 'hardware' you are using to play their games or use Game Pass on. They'll probably know if you buy any games/products from them and whilst they are playing any Xbox product/service that month, will still count as a Monthly Active User too.

The very fact it uses 'Xbox' in the name and has an Xbox button too means MS will get money from this - of course they get money from every Windows PC sold as you get a 'windows licence' included with it, but they have collaborated 'more' with this device so it feels more like an Xbox controller than any other handheld device, so I'd imagine that MS will be getting some of that cost back too.

How you want to view it may not be the same way Microsoft view it, or how some others view it - but it is an 'official' Xbox product made in collaboration with a 3rd Party hence its appearance at Xbox based events/shows - but Xbox doesn't 'JUST' mean their Console platform - its been their Gaming Brand for years across PC and Cloud enabled Devices - every device is an 'Xbox' in their messaging as it plays Xbox Games, if not 'natively', then certainly via streaming and that includes from your console if not available on their servers and their Platform - you need Game Pass a MS Sub to stream, their games are on their platform on PC just like Console so maybe do see this as more a '3rd Party' manufactured Xbox product as its mostly their design and Software mixed with a bit of Asus...

@BAMozzy Okay, and what bucket would you put that in if you were Microsoft? Xbox gaming due to the license even though they wouldn't count the hardware itself? Windows OEM because it is still a windows 11 OEM PC? Something else entirely because it's as you say a licensed product? For that matter what bucket did the recent Xbox meta headset go into? Or do all the "made for Xbox" sticker accessories go into? I'd be surprised if they count as hardware in the same way Microsoft counts the hardware they make. That's all I'm saying about it: it'll be pretty difficult for us as outsiders to track and I think the software here is more important than the hardware. How it's viewed is a separate discussion and one that's rather moot as we can see how people are viewing it and how that's affecting perception of Xbox consoles (which is honestly an Xbox and Microsoft marketing discussion).

@Fiendish-Beaver This is pretty normal. Maybe necessary legally speaking too? Microsoft shares their predictions for the next quarter at the end of every earnings call and with that they share predictions for every aspect tog the company. AFAIK every publically traded company does. All that was said was "Hey, we'll have a weaker Q1 this year than we did last year in XYZ business markets." I imagine a lot of consumer related businesses are making similar comments. Microsoft has made these exact comments tons of times. Shareholders are just owed this information as investors. There are ups and downs. And Microsoft isn't immune to global economic conditions.

Shareholders will only be able to buy one super yacht instead of two, oof these really are trying times. Thoughts and prayers to the billionaires.

@WildConcept6 I doubt they'll count it as their 'own' hardware but that they'll know exactly how many are sold and that everyone who plays a Microsoft product or uses their services, they will still count as a Microsoft Active User.

It doesn't really matter how MS want to view these 3rd Party made licensed hardware - its no different from non-licensed Headsets and handheld PC's in reality and if you use Game Pass or play a Microsoft game, you'll count towards Microsofts Monthly Active Users.

MS may have a bit more 'insight' into how well these devices are selling as they have their Brand attached, may see it as their 'own' made by a 3rd Party or not, but really doesn't matter since 'everything' is an Xbox these days and anyone engaging with any Microsoft game is choosing to spend their time and money on Microsoft products.

It will also likely come with a month or 2 of Game Pass - a Microsoft Service to get you in...

Its a bit like games - some maybe made by Microsoft, Some maybe Xbox owned IP's but made by a 3rd Party studio (like Flight Sim) , Games made by a 3rd party but published by MS (like Sunset Overdrive) and totally 3rd Party. 3 of those would likely still be exclusive yet only 1 is made and owned by Microsoft. It doesn't really matter whether they classify some games (or Hardware) as their 'own' - even if all they did was be the Publisher (don't own the IP or Studio) if its making them money from sales. Its possible they could see it as 'joint-ownership' - their 'Xbox' and Asus 'Ally' - Asus the technical Hardware and manufacture, MS the ergonomic design and software, the 'games' for a gaming handheld as Asus don't do software.

MS won't care what hardware you choose to play Microsoft games on - just that you are spending time and money on their Products/services. It doesn't matter if you don't buy their own Hardware, let alone a 3rd Party made licensed product because you can play Xbox 'ANYWHERE' and wherever you play, you are still contributing to their MAU's and 'engagement' data. Its not limited to their own Hardware only...

@BAMozzy yeah, I agree with everything stated. My original comment is just that I don't think we'd see the effects in gaming revenue specifically at the earnings report following release. They'll definitely talk about it and MUA users, but it's probably also not something we'd be able to easily judge how successful it is as outsiders. That and I'm curious how exactly Microsoft would classify it and the new age of gaming OEMs it's sure to kick off. Yeah it's ultimately the same either way, but it's interesting to think about.