By The atmosphere surrounding Xbox isn’t optimal at the moment, and Microsoft‘s most recent financial statement provides some significant figures to support this sentiment. Hardware income continues to drop, and the overall gaming revenue remains largely stagnant. That’s typically not the sort of news that growth-oriented investors appreciate – particularly while Microsoft’s cloud and AI solutions under the Azure brand are experiencing swift expansion.
“Gaming revenue fell by $113 million or 2%, primarily due to a decrease in Xbox hardware, partially balanced by an increase in Xbox content and services,” Microsoft mentions in its FY26 Q1 financial statement. “Revenue from Xbox hardware dropped 29% due to a reduced number of consoles sold. Meanwhile, revenue from Xbox content and services rose by 1% compared to a strong previous year, spurred by growth in Xbox Game Pass and third-party content, albeit partially offset by a decline in first-party offerings.”
These types of drops in Xbox hardware have been occurring for years, and a 29% decrease is not unheard of – however, it stands out particularly in light of these figures being reported as Microsoft continues to raise the cost of Xbox consoles. Higher profit margins won’t automatically equate to increased revenue, but you have to attempt to balance the graphs somehow, right?