Microsoft’s gaming business reports a 50% jump in quarterly revenue

Microsoft’s gaming business has reported a surge in quarterly revenue following strong demand for Xbox content, services and hardware.

On Tuesday the company announced its results for the third financial quarter ended March 31, 2021.

Boosted by the launch of Xbox Series X/S in November 2020, the division’s third quarter revenue was up 50 percent year-over-year to $3.53 billion.

Xbox content and services revenue increased 34 percent “driven by strength from third-party titles, Xbox Game Pass subscriptions, and first-party titles”.

And Xbox hardware revenue was up 232 percent “driven by continued demand for Xbox Series X/S”.

Microsoft said gaming revenue and Xbox content and services revenue “include ZeniMax”, Bethesda‘s parent company, which was acquired by the Xbox maker for $7.5 billion during the third quarter.

According to Niko Partners senior analyst Daniel Ahmad, the results represent “the best Q1 (FY Q3) for Microsoft’s gaming division since they started breaking out numbers about six years ago”.

Speaking about the performance of the gaming business during Microsoft’s third quarter earnings call, CEO Satya Nadella said: “We’re expanding our opportunity as we help both gamers and creators play, connect and build across communities on any device.

“People are turning to Xbox more than ever to play and chat with friends and we saw record engagement this quarter led by strength on and off console.

“With Game Pass, we’re redefining how game are distributed, played and viewed. Just last week we added cloud gaming via the browser, expanding our reach across PC and mobile.

“Content is the flywheel behind the service’s growth and upon the closing of our acquisition of ZeniMax Media this quarter, we made 20 of the world’s most iconic and beloved games accessible via Game Pass with more to come.”

Nadella also said: “Minecraft has nearly 140 million monthly active users, up 30 percent year-over-year, making it one of the leading platforms in the creator economy.

“Creators have generated over $350 million from more than one billion downloads of mods, add-ons and other experiences in Minecraft.”

Later on the call, Microsoft’s chief financial officer, Amy Hood, said the company expects Xbox Series X/S supply issues to continue until at least June 2021.

Further reading

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Microsoft expects Xbox Series X/S supply issues to continue until at least June 2021

Company suggests “significant demand” for the consoles will be hard to meet

Reporting its second quarter results in January, Microsoft said Xbox Series X/S enjoyed the biggest console launch in the company’s history.

Speaking on its earnings call, Nadella said the company surpassed $5 billion in gaming revenue for the first time during the three months ended December 31, 2020.

“The launch of Xbox Series X and Series S was the most successful in our history with the most devices ever sold in a launch month,” he claimed.

Nadella also announced in January that Xbox Game Pass had amassed 18 million subscribers, up from 15 million previously reported in September 2020.