Microsoft’s gaming division reports record Q1, with hardware revenue up 13%

Microsoft’s gaming business has reported its best-ever quarterly revenues for a Q1 period for the second year in a row.

On Tuesday, the company published its results for the first fiscal quarter ended September 30, 2022.

According to the company, Xbox hardware revenue grew 13%, and gaming revenue grew “slightly” at 4%. Meanwhile, Xbox content and services revenue declined by 3%, despite growth in Xbox Game Pass subscriptions.

The company said this was due to declines in first-party content and third-party content, with lower engagement hours overall and higher monetization.

As noted by independent analyst @DomsPlaying, the revenues represent an increase of around 0.47% year-on-year, making the quarter Xbox’s best ever Q1 in terms of revenue.

Speaking during a web call on Tuesday (transcribed by VGC) Microsoft CEO Satya Nadella reported strong performance for gaming off console.

“We saw usage growth across all platforms driven by the strength off console,” he said. “PC Game Pass subscriptions increased 159% year-over-year, and with cloud gaming, we’re transforming how games are distributed, played and viewed. More than 20 million people have used the service to stream games to date.”

He added: “As we look towards the holidays, we offer the best value in gaming with Game Pass and Xbox Series S. Nearly half of the Series S buyers are new to our ecosystem.”

Microsoft is currently facing scrutiny from global regulators over its proposed $68.7 billion of Activision Blizzard, amid antitrust concerns during a time of increasing consolidation in the gaming industry.

Further reading

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UK regulator asks members of the public to share their views on the Xbox-Activision deal

The CMA is inviting opinions on whether the acquistion should go ahead

Microsoft recently criticised the UK competition regulator’s decision to expand its inquiry into the proposed acquisition, calling its concerns “misplaced” and claiming that it “adopts Sony’s complaints without the appropriate level of critical review”.

In the CMA’s extensive summary of its decision to expand its inquiry, it said it’s concerned the deal could harm PlayStation and other game subscription services, should Microsoft make Activision Blizzard content exclusive to its platform.