Xbox Series X and S sales struggle as Microsoft reports gaming revenue down 4%

eurogamer.net:

Microsoft's gaming revenue fell four percent and Xbox hardware revenue declined 30 percent in the latest financial quarter, the company has reported.

While Microsoft does not report console sales and did not provide an updated number for Game Pass subscribers (it had 25m as of January 2022), it's clear the company is struggling to sell Xbox consoles. In fact Xbox console sales have struggled for some time. Xbox Series X and S sales were down during the crucial holiday quarter last year, and it looks like they were down in the quarter ending 31st March this year, too.

The only bright spot for Microsoft was a slight three percent increase in Xbox content and services revenue. The company said this was «driven by better-than-expected monetisation in third-party and first-party content, and growth in Xbox Game Pass».

So, why is Xbox struggling? In its financial report, Microsoft blamed most of the Xbox hardware revenue decline on «increased console supply» during the same period last year, which suggests it's still having a hard time with Xbox Series X and S supply two-and-a-half years after launch.

But the drop in Xbox console sales can also be attributed to Microsoft's first-party video game woes. Xbox Game Studios had an extremely quiet 2022 after a string of delays, and with the failure of Halo Infinite, there is increased pressure on Bethesda's Starfield, due out later this year, to fuel interest in Xbox consoles and Game Pass.

Microsoft boss Satya Nadella put a positive spin on the quarter in additional remarks, revealing the company set third quarter records for monthly active users and monthly active devices in Xbox.

«Great content remains the flywheel behind our growth,» Nadella said. «We have now surpassed 500