
Xbox Sees Growth in Game Pass and 3rd-Party in Latest Quarter, Hardware Revenue Drops - Sales
by William D'Angelo , posted on 01 August 2023 / 5,188 ViewsMicrosoft has released its earnings report for the fourth quarter of the 2023 fiscal year, which ended up June 30, 2023.
Xbox gaming revenue increased by $36 million year-on-year or by one percent. This was due to "growth in Xbox content and services," which was "offset in part by a decline in Xbox hardware."
Xbox content & services revenue increased five percent. This was due in part by "growth in third-party content and Xbox Game Pass." Xbox hardware revenue decreased 13 percent year-on-year. This was due to "lower volume of consoles sold."
Microsoft's gaming division based on estimates did have its second best fiscal year ever, only behind the 2022 fiscal year.
Microsoft CEO Satya Nadella did reveal Xbox monthly active users and engagement on Xbox Game Pass set a record for the fourth quarter.
"Revenue increased 1 percent and 2 percent in constant currency, lower than expected, due to weakness in first-party and third-party content performance," said Microsoft CFO Amy Hood in an earnings call. "Xbox content & services revenue up five percent and 6 percent in constant currency, and Xbox hardware declined 13 percent."
Overall, Microsoft reported for the quarter GAAP revenue up eight percent year-over-year to $56.19 billion and net income up 20 percent to $20.08 billion.
For the entire fiscal year, Microsoft reported GAAP revenue up seven percent to $211.92 billion and net income down one percent to $72.36 billion.
Gaming in the first quarter of the 2024 fiscal year, which ends September 30, is forecasted to see growth. Overall gaming is forecasted to grow in the mid single digits, while content & services is expected to grow in the mid to high single digits. The forecast does not include Activision Blizzard.
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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Hardware decline was an obvious outcome once MS went down the services route.
I didn't think it would happen this quickly honestly.
Yes. They are knowingly and intentionally cannibalizing xbox hardware sales in an effort to grow streaming.
I imagine it'll be a decade or so before we know if this was a good idea.
Welfare who seems to be a trusted source in relation to this site states Series X/S is now behind X1 in terms of shipments and is no longer the fastest selling Xbox.
Crazy to see xbox hardware continue to decline like this. I think this has been multiple quarters of this happening. I know they don't care about trying to sell the most consoles but they can't possibly be ok with selling less consoles than they did last gen.
They badly need a 5nm slim refresh of the Series X to get per wafer due numbers up. If I was them I would also pause xcloud deployment, as the FTC documents showed they have been siphoning off millions of Series X dies for xcloud servers and the payoff does not seem clear to me
Fairly sure that is the future, so why not? Weren't MS thinking of releasing a streaming box?
Yea they thought about a streaming box but bailed on it. The problem is you're fairly sure it's the future but honestly no one really knows. In the meantime Xbox appears to be losing possible customers over this.
The problem with the streaming box was that it had to come with a controller, and that made it nearly impossible to get it cheaper enough than a Series S to be appealing, in Microsoft's estimation.
I do use the streaming since it's included in Game Pass Ultimate, but not enough to pay for it if I had the choice to not do so.
Agreed on the 5nm die shrink.
Disagreed on not needing to divert units to Xcloud servers. That WOULD have been the right call from launch until now, but now that supply appears to mostly be meeting demand they now have the luxury of doing it. It's the first couple of years where that was the wrong call IMO, and they should have continued producing Xbox One-based servers (especially since the games are only streaming at 720p anyway) since they could probably have done that in a way that either didn't take away from Xbox Series production, or did so in only a fairly limited way. That would have better supported Microsoft's ability to sell consoles, and to therefore get more people signed up for their services. Especially when the PS5 was badly supply-constrained, and there were some people willing to get a Series X if they couldn't find a PS5.
So 36 million being 1% of yearly revenue does that mean Xbox division revenue for the quarter is around 3.6 billion?
It Will be interesting to see:
Xbox and ABK revenue vs Xbox + ABK revenue.
ABK on GP day 1, will this generate more revenue?
I wouldn't be surprised if we finally get a Game Pass update with actual numbers with Starfield coming out, some ABK games likely coming to the service, and Xbox Live Gold becoming Game Pass Core. So all current Gold subs will become Game Pass subs.
BIG $$$$ NUMBERS!!
After the lackluster 2022 and early 2023 I'm not surprised. Will see next year, if it turns out as packed as announced, it should gain back some momentum and at least track once again ahead of Xone.
On IB, some suggest the shipped quantity for Xbox Series consoles during the Jan-June 2023 period is about 2.8m units
How does that quantity is compared to VGC estimates ?
VGC estimates have Xbox Series at 2.44M with Americas and rest of world for June not up yet.
As long as NPD/Circana isn't delayed again, Americas estimates for June will be posted on Friday, while rest of world to get worldwide estimates will either be posted this weekend or on Monday.
It seems that the Xbox Series consoles are tracking behind Xbone now.
We don't know for sure if it has or hasn't fallen behind. Our XS estimates do match the 21M+ figure from Microsoft. and our X1 estimates match the 58M figure. So if anything I would need to move some later X1 sales we have to holiday 2015 and first half of 2016.
“ Our XS estimates do match the 21M+ figure from Microsoft.”
Doesn’t it only match one single interpretation of that number, and the most favourable one possible. That it was a sell-through number and up to the end of the previous accounting period. What if it was a shipped number and more recent than from March?