Microsoft has some good and bad new on the video game front for their quarterly report released today.
To be clear, this is the first quarter for this financial year 2023, covering the previous three months and ending in September 30, 2022. Microsoft reported lower numbers for Xbox software, counteracted by higher numbers for hardware. Xbox and Microsoft in general did have a profitable year, but with mixed results on year on year growth.
For this quarter, they made $ 50.1 billion in revenue, up 11 % year on year, $ 21.5 billion in operating income, up 6 % year on year, and $ 17.6 billion in net income, down 14 % year on year.
Microsoft no longer directly reports Xbox numbers, but they have split up these revenue streams across different divisions. We break those down further below.
The More Personal Computing division, which includes Xbox, is down 15 % year on year. Xbox content and services revenue, which includes software and other media sold in the platforms, is down 3 % year on year.
And now, the good news. Xbox hardware revenues are up 13 % year on year. The Intelligent Cloud server division, which includes Xbox Cloud Gaming, is up 20 % year on year. Microsoft also touts one direct metric for Xbox Cloud Gaming, pointing out that they now have 20 million additional users for the service. In the same vein, they also revealed that half of all Xbox Series S consoles were sold to people who did not own an Xbox console previously.
Microsoft and Sony are still doing this back and forth on how they are the console company at a disadvantaged position in the industry, in relation to Microsoft’s acquisition of Activision Blizzard. Because of this, both Microsoft’s and Sony’s financial reports will yield pieces of artillery when it comes to the antitrust investigations ongoing by several regulators. These financial disclosures may not necessarily decide those investigations, but whichever company will come out looking better, will ironically be looking worse in the context of the investigations.
And so, this news on cloud gaming seems to dispute Microsoft’s own statement to the UK Competition and Markets Authority (CMA) that the cloud gaming business is still immature and untested. It’s a business that has continued to grow, as Microsoft has integrated it with their Bing search engine and Meta Quest. They have even been teasing an upcoming cloud gaming streaming device. With all that said, we may get different numbers in future Microsoft communications to the CMA contextualizing that this growth is nowhere near as big as It could be.
On the other hand, Microsoft’s news on Xbox Series S continues to prove they were correct to bet that a cheaper, less powerful, current generation console would sell well, even without a disc drive. This could also benefit them in the investigations. Microsoft can cite this as proof that they are a growing business in spite of Sony’s dominance, and finalizing that acquisition of Activision Blizzard would make them more competitive to Sony, providing a greater challenge to their competitor.
In any case, it’s good that Microsoft’s gaming initiatives continue to stay profitable, and great that some segments are even thriving.
Source: GamesIndustry.Biz, Aroged, ComicBook
