Stalling Xbox Series X/S Sales Has Caused Revenue Drop For Microsoft

As we’ve covered plenty of times, the current state of the gaming industry is in flux in many respects. When you look at the “Big Three” in terms of publishing, you’ll see three very different stories being told, and only one of them truly has their “future laid out for them.” Both Sony and Microsoft had a hard 2024 overall, as both companies were called out for a certain “lack of meaningful games,” too much focus on the live-service genre, and more. This led to major shifts within the company, including the Xbox Series X/S and PS5 losing certain exclusives to other platforms.

As noted by VGC, the latest quarterly earnings for Microsoft came out, and the Xbox brand as a whole was down 7% in revenue. While that might not sound like much at first, that equates to a loss of about $530 million. That’s a lot of money. So, why did it go down? Simply put, the Xbox Series X/S isn’t moving units. A year-to-year comparison revealed that hardware sales for the latest Microsoft console were down 29%! That’s quite a drop in a year, especially when you look at the “success” that the brand had on the gaming front during the same quarter.

For example, Xbox Game Pass has apparently been growing in subscribers, especially on the PC front. There was even 2% growth on the “content and services” front. Not a lot, but at least it’s a positive gain.

Microsoft’s CEO, Satya Nadella, had this to say on the results of the quarter:

“We’re focused on improving the profitability of the business in order to position it for long-term growth driven by higher margin content and platform services, and we are delivering on this plan.”

So, yeah, Microsoft is trying to spin all of this positively, which is fine for now, but it won’t fix everything. One “honor” that Microsoft’s CEO was touting was the huge success of a certain first-person shooter that dropped over the holiday quarter. The game was so big that it was the top title on both Xbox and PlayStation charts. The problem? A vast majority of those gamers bought the title on PS5. So, while it did make revenue, it wasn’t because people went to the Xbox; they just bought a game that Xbox technically published.

As such, if the FPS hadn’t dropped in that quarter, things would’ve been even worse for the company, as it would’ve meant the only big holiday release was a game starring Indiana Jones.