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Xbox Gaming Revenue Grew Slightly in September Quarter, Xbox Game Pass Continues Growth

Xbox Gaming Revenue Grew Slightly in September Quarter, Xbox Game Pass Continues Growth - News

by William D'Angelo , posted on 25 October 2022 / 3,254 Views

Microsoft has released its earnings report for the first quarter of the 2023 fiscal year, which ended up September 30, 2022.

Xbox gaming revenue increased "slightly" (less than one percent) year-on-year from $3.59 billion to $3.61 billion. This is the best September quarter ever for Xbox in terms of revenue.

Xbox Content & Services revenue decreased three percent. This was due to "declines in first-party content and third-party content, with lower engagement hours and higher monetization." This drop was partially offset by growth in the number of Xbox Game Pass subscriptions.

Xbox hardware revenue grew 13 percent year-over-year.

Xbox Gaming Revenue Grew Slightly in September Quarter, Xbox Game Pass Has Continued Growth

Overall, Microsoft reported revenue up 11 percent year-over-year to $50.12 billion and net income down 14 percent to $17.56 billion.

The latest VGChartz estimates put Xbox Series X|S sell-through at 17.51 million as of October 15, 2022. The Xbox Series X|S continues to be the fastest-selling Xbox console generation ever as it is tracking ahead of the original Xbox, Xbox 360, and Xbox One.

A life-long and avid gamer, William D'Angelo was first introduced to VGChartz in 2007. After years of supporting the site, he was brought on in 2010 as a junior analyst, working his way up to lead analyst in 2012 and taking over the hardware estimates in 2017. He has expanded his involvement in the gaming community by producing content on his own YouTube channel and Twitch channel. You can contact the author on Twitter @TrunksWD.

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aTokenYeti (on 25 October 2022)

Hardware up 13% vs last year. I think they will absolutely break through the 10 million consoles sold in a single year mark.

  • +9
Azzanation (on 25 October 2022)

Hurry up MS, i need some negative articles so i can criticise your brand so i stop looking like an Xbox fanboy. I cant post negative things on positive articles. Its been too long.

  • +1
DonFerrari (on 25 October 2022)

And we still have no answer regarding profit or sales.

  • -4
Blood_Tears DonFerrari (on 25 October 2022)

Exactly, I mean we knew there wouldn't be any hardware numbers but no update on Gamepass subs either.

  • 0
smroadkill15 Blood_Tears (on 25 October 2022)

MS announced growth for PC Game Pass and Game Pass overall. I'm sure they will announce a number early next year like they did when it hit 25 Million.

  • +2
Drakrami smroadkill15 (on 26 October 2022)

Dont think so. Their numbers have not been good, so they dont release the numbers. If they were having good growth, they would be announcing subscription numbers like netflix. "Growth by the number of gamepass subscriptions" can be any BS from a particular date or something.

  • -7
smroadkill15 Drakrami (on 26 October 2022)

They went a year between announcing numbers last time so chances are they will do the same again. Or wait until they hit a certain milestone. Either way, growth is growth. Can't knock it until you know.
If it's not obvious, MS doesn't function the same way Netflix does. Their entire business is driven by subs so of course they have to update every chance they have. MS doesn't need to constantly update Game Pass numbers to keep shareholders happy.

  • +4
shikamaru317 Drakrami (on 26 October 2022)

Xbox has never given Gamepass numbers on every single quarterly financial results, they seem to only post them when they reach certain milestones. They announced 10m on the end of March 2020 financials, 15m on the end of September 2020 financials 6 months later, 18m on the end of December 2020 financials 3 months later. Then they went a whole year with no updates as they were waiting on the big 25, 25m which was announced for the end of December 2021 financials. Most likely they are waiting until they reach 30m before announcing numbers again, and clearly the first 3 quarters of the year so far were not enough to reach that 30m number yet (not surprising as they have pretty much no exclusives this year). But I reckon they are closing in on that 30m now and may announce it on their end of December 2022 financials thanks to a Holiday season boost, afterall they confirmed today PC gamepass subs are up 159% year over year.

  • +6
DonFerrari shikamaru317 (on 26 October 2022)

Explain to us the milestone logic since you have 10, 15, 18 and then 25.

  • 0
smroadkill15 DonFerrari (on 26 October 2022)

It's fairly straight forward. 18 million was what they reached to finish 2020. 10 and 15 were milestones prior since they hit those quickly. Then they announced 25 million at the end of 2021. Next will likely be 30 million once they hit it.

  • +4
shikamaru317 DonFerrari (on 26 October 2022)

It's not a milestone, but I'm guessing they thought 3m new subscribers in a single quarter was impressive enough to tell their investors about. Other than the 18m odd man out, every single other Gamepass numbers update has been on multiples of 5, first 10m, then 15m, then 25m.

My guess would be that MS will break their usual milestones only numbers plan if they have a particularly impressive quarter like 3m in 3 months on the end of December 2020 financials. However, there isn't likely to have been any particularly impressive Gamepass growth quarters so far this year, since they had no major exclusives releasing this year, and their day one Gamepass 3rd party deals have also been somewhat lacking compared to earlier years. We should get the next update when they hit 30m subs, which could be on the final financials update for calendar 2022, thanks to a Holiday gamepass boost.

2022 should be their last drought year for 1st and 2nd party exclusives since they have so many 1st party studios now (soon to be even more if Acti-Blizz deal closes), plus alot of upcoming 2nd party deals which have leaked or been announced already, so 2022 should be the last slow growth year for Gamepass for awhile. 2023 should be a big growth year for Gamepass thanks to the large number of major exclusives expected out of Xbox next year (Redfall, Forza, and Starfield already announced for 1st half 2023, while Avowed, Contraband, and Hellblade 2 all have a chance of releasing in the 2nd half of 2023). Starfield alone should move a ton of Gamepass subs the quarter it releases in, on both PC and Xbox. Diablo 4 will also be day one Gamepass most likely if the Acti-Blizz acquisition closes before Diablo 4 releases next year.

  • +3
DonFerrari shikamaru317 (on 26 October 2022)

Your explanation makes sense.

  • +2
pitzy272 Blood_Tears (on 27 October 2022)

I was wondering this. Thought I missed something in the report.

  • +3
pukem0n DonFerrari (on 26 October 2022)

who gives a shit? I don't work for Microsoft.

  • +2
tslog (on 25 October 2022)

decent numbers for Xbox who doesn't have many games worth getting the console for at the moment. But not that good either.
Will Xbox use these numbers to improve their case with the CMA ? Not that they need to, becuase the argument speaks for itself that this is an easy approval decision.

  • -5