Xbox revenue fell 7% in Q2 as hardware sales dropped 29%
A decline in console sales led to a fall in revenue for Microsoft’s gaming division in Q2
Microsoft has reported a 7% revenue decline for its gaming division during its second fiscal quarter.
The division generated $6.6 billion in revenue during the three months ended December 31, 2024, which was down $530 million year-over-year.
The decline was attributed to a 29% drop in Xbox hardware revenue, driven by a lower volume of consoles sold during the quarter.
Xbox content and services revenue increased 2% year-over-year, fueled by growth in Game Pass.
Microsoft completed its acquisition of Activision Blizzard in October 2023, in the process taking ownership of franchises including Call of Duty, World of Warcraft, Diablo and Overwatch.
That was followed by a significant rise in sales for its gaming division during Q2 last year, as well as the following three quarters.
The three months ended in December 2024 mark the first time it has been possible to compare quarters since the completion of the $75.4 billion Activision deal.
Microsoft will hold its Q2 earnings conference call at 2.30pm PT / 5.30pm ET / 10.30pm GMT, when CEO Satya Nadella may offer more insight into the Xbox division’s performance, and the company will provide guidance for Q3.
Update
Nadella ran through the Xbox division’s quarterly highlights during the company’s earnings call.
“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,” he said.
Nadella claimed Black Ops 6 enjoyed a record breaking launch quarter as it topped software sales on both Xbox and PlayStation.
He also said that Indiana Jones and the Great Circle has attracted over four million players since its release in December.
“We also continued to see strong momentum for Xbox Cloud Gaming, with a record 140 million hours streamed this quarter,” Nadella added.
“All up, Game Pass set a new quarterly record for revenue and grew its PC subscriber base by over 30% as we focus on driving fully paid subscribers”.
$465 million was spent on Microsoft games over December, making the company the world’s biggest publisher across PC, PlayStation, and Xbox, according to data from Ampere which was published earlier today.
Microsoft has been putting increased focus on its multi-format strategy, and 64% of consumer spending on its games in December was on PlayStation formats (driven by Call of Duty).
Ampere said that Microsoft was comfortably ahead of second-placed Electronic Arts, which generated $366 million over the same period.
