Xbox Revenue Jumps 51% Year-on-Year, Hardware Revenue Falls 31% - Sales
by William D'Angelo , posted on 01 May 2024 / 8,133 Views
Microsoft has released its earnings report for the third quarter of the 2024 fiscal year, which ended up March 31, 2024.
Xbox gaming revenue increased by 51 percent year-on-year to $5.45 billion. This includes "55 points of net impact from the Activision acquisition." This is better than Microsoft's expectations, which forecasted revenue to grow in the low 40s percent, with 45 points of impact from Activision Blizzard.
Xbox content & services revenue increased 62 percent compared to the same quarter a year ago. This includes "61 points of net impact from the Activision acquisition." Once again, this is better than the low to mid 50s percent forecast.
Xbox hardware revenue fell 31 percent compared to a year ago. This is inline with expectations, which was to see a decline year-on-year.
Overall, Microsoft reported for the quarter GAAP revenue was up 17 percent year-over-year to $61.86 billion and net income was up 20 percent to $21.94 billion.
Microsoft CEO Satya Nadella in the company's earnings call revealed gaming set third quarter records for game streaming hours, console usage, and monthly active devices. There were over 10 million hours played of Diablo IV in its first 10 days available on Game Pass.
"We are committed to meeting players where they are by bringing great games to more people on more devices," said Nadella. "We set third quarter records for game streaming hours, console usage, and monthly active devices.
"Last month we added our first Activision Blizzard title Diablo IV to our Game Pass service. Subscribers played over 10 million hours within the first 10 days, making it one of our biggest first-party Game Pass launches ever."
Nadella added Microsoft had seven of of the top 25 games on the PlayStation Store earlier this month, which was more than any other publisher.
"Finally, we're expanding our games to new platforms, bringing four of our fan favorites to Nintendo Switch and Sony PlayStation for the first time. In fact, earlier this month we had 7 games among the top 25 on the PlayStation Store, more than any other publisher."
Microsoft's forecast for the quarter ending June 30, 2024 expects total Xbox revenue to grow in the low to mid 40s percent year-on-year, with 50 points of impact from Activision Blizzard. Xbox content & services is expected to grow in the high 50s percent, with 60 points of impact from Activision Blizzard. Xbox hardware revenue is expected to decline.
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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Revenue without ABK would be 4% down.
They mostly shipped just slightly above 800k Xbox Series X/S units for the Quarter.
How many units do you think the Xbox will sell by the end of the year?
800k seems scarily close to what the Wii U was selling during its prime. And that console only sold 14mil LTD…that’s pretty awful. But Xbox is seemingly in a transitionary period at the moment, so this isn’t entirely unexpected.
I don't own an Xbox Series X., but I find it a shame that it's not performing that great because it seems pretty decent hardware. Unlike the Wii U, which I owned and actually enjoyed a lot but objectively it has many problems as a product and failed hard with good reason.
What’s this estimate based on?
That’s a lot lower than VGchartz estimates I believe.
Soooooo... $69b for 4% of revenue?
They will as long as Call of Duty and Candy Crush remains popular for the next 10-20 years.
Xbox hardware sales continue to melt
they say the y loose or break even on console sales? if thats true the decline in hardware sales and revenue being way up means larger profits?
These results show something very interesting:
1) The XBox division is not dependent on hardware sales, so it can make the next console generations while the platform is still relevant;
2) Betting on games reaching as many platforms as possible is the path to the division's financial and sustainable health;
3) Investments in cloud gaming, game pass and mobile could increase the division's revenue and further consolidate it in the gaming world;
4) With more than 30 studios, it is possible to launch 4 big-budget games per year and one more low-budget game (more games like Hi Fi Rush and Gounded to come);
5) I think the platform where users play the most big-budget Microsoft games is the PC. The company has to take more care of optimization and quality on this platform.
Cloud gaming, Games as a Service and Mobile gaming were for a long time looked down by many but the cold hard truth is that they are real markets with potential to exploit. As they grow and find their public, Microsoft sure must be glad they took on the initiative to jump on the bandwagon early on and put some big bucks and long term planning behind it.
Game Pass already proves GaaS can work for both business and customers. Mobile is gigantic with the only major downside being all the low effort games with mtx attached to them, but the fact that bad games exist doesn't mean good games can't (and there are a lot if you bother looking). Cloud gaming might be a mixed bag I feel but I am surprised I met a couple people who gave it a try and it kinda works for them, I can see it having a decent future as the years go by.
Since getting the ps portal and the logitech g-cloud, I find myself playing way less on the actual consoles themselves and instead use these handhelds to play via streaming. i was apprehensive of cloud at first... but it works for me.
Here's the problem: Past performance is not an indicator of future success.
Those 30 studios need to start producing some gold... and they are competing with a pile of new, more motivated, up-and-coming independent studios.
It's a great question, but to do so, Microsoft must certainly carry out a market study.
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What are the most played genres by platform, by age, by gender, by region?
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How to attract the new generation? They will be my future clients...
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How can I get the user to join my ecosystem, even though they are currently on a competing platform? At this point, Microsoft can make the user have a company account, so if the user decides to migrate platforms, they can take their entire library of games from the XBox to the platform they want, be it PC, Cloud Gaming or another new hardware on the market.
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Focus on making more low-budget games, but with quality and fun (Nintendo games are like that! Palworld is like that! There are several cases of low-budget games being more successful than big franchises).
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Buy mobile studios and studios in key countries such as Japan, South Korea, Thailand, India, Brazil and other economies that have the potential to become major customers.
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Invest more in cloud gaming so that more users can use mobile devices or low-end PCs to have fun. If the cloud can run games at 4K, 60FPS and without performance drops, then the console becomes meaningless. Furthermore, Microsoft needs to allow users to play games purchased from its store via cloud gaming.
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Develop portable hardware with the possibility of running games natively and in the cloud.
At this moment, Microsoft is its own enemy, as it has already managed to solve the problem of purchasing Sony's exclusives and marketing agreements with Bethesda and Activision Blizzard, so it just needs to strengthen itself in the East. There are few studios with financial health, so id@xbox is another way to attract independent studios to form a partnership, after all, now the division has revenue to be able to cover offers from competitors.
Down 31% year on year when last year was already down over the year prior.
Xbox won't even sell 50 million
Currently Xbox Series is 7.6% behind Xbox One. The lifetime sales of Xbox One are 57.96M. If the current rate stays the same (which is unlikely), Xbox Series would end up at 53.55M.
Xbox had the release of the Xbox one X still coming up though and that gave it a nice boost. They also weren't releasing their games on PlayStation. It is not even close to being the same this time and jvmkdg will be right and it doesn't matter how much people thumb him down.
I think the biggest hurdle (more than the One S and One X giving a boost) is the timing. With Xbox confirming earlier this year that they're working on next-gen, November 2026 looks like the release date for the Fifth Xbox.
Software likely won't propel the Series forward near or past the Xbox One unless GTA VI makes that big of a splash on Xbox.
Even if Xbox Series stays in production after the launch of its successor, it would need price cuts too to get close to the One.
At -30% YoY for two consecutive years and likely to continue next year I don't think it will reach 40 million. Welfare did the math and Microsoft predicts another -30% in hardware performance next quarter.
It won't even get to 40 million.
If next gen starts for them in 2026, It might not make it. Its probably overtracked on Chartz because sales are falling faster than any of us could anticipate.
MS fails to be really competitive in this market and thus is using its revenues from other sectors where they are competitive to literally buy the gaming market. Not sure it's very healthy for the overall gaming market.
MS are not SEGA... they have the ability to keep a presence, no matter how small, in the console space while also serving its wares on other platforms. That has been their long term goal since XB was first thought about. They make more $$ off software and services to the point where they are not reliant on hardware alone... like others may be.
While I agree with the present strategy,I have to disagree about it being a goal since day one, MS entry had to do with the mindset at the time that computers were heading toward becoming a one stop shop infotainment unit that would essentially see your home becoming centred around one system being able to do business watch movies/ tv playing games the list goes on,it even had its own slogan "the one system to rule them all ".
Now Bill Gates with his wanting windows sitting behind everything mindset upon hearing Ken Kutaragi talking about the PS2's multimedia capabilities immediately saw this as a potential threat to windows itself, hence why MS entered the market with three aims ,the most positive one being to win the multimedia market for themselves thus further cementing windows software, the other more realistic aim being to disrupt and prevent Sony from dominating that perceived future , but funnily enough despite multimedia being the buzzword of the times selling games was Sony's number one focus and it didn't take long for it to become the same for Xbox.
I remember how loud and vocal people were about gen was gonna be a big xbox come back and how 12tf beast is gonna take over regions and playstation should be worried and xbox will take market share away from PS5 JUST WAIT for real this time!
yeah good times.....
Microsoft fumbled hard at the launch of the Xbox One, both with the advertising and the performance of the console, while no similar thing happened at launch of the Xbox Series, so people thought it would do better this time around.
It seemed like a logical way to think, but it looks like the XBO killed so much mindshare of the Xbox brand that it has lost so much drawing power that it can't even keep up with it's predecessor anymore.
I wont say the launch of the Xbox Series was just as bad as the XOne but they did release the console with absolutely no flag ship titles. That to me was a horrible way to start the gen.
I agree, they did the same mistake in that regard as Nintendo did with the Wii U (though Nintendo made much more than just that one blunder with that console) and launched the console without any killer app to get the ball rolling.
The pre-launch Xbox One was an epic fail because of the forced online, forced Kinect, and over-emphasis on multimedia features.
Pre-launch, the forced online (removed via an update) and forced Kinect integration was removed. Still, the thing launched for $499.99 USD with a forced Kinect bundle and a bulkier console and AC adapter that was weaker than PS4.
Xbox Series X/S fixed some of those baffling choices, but the software in terms of first- and third-party console exclusives just haven't measured up yet and the thing is turning 3 and a half years old.
Series X/S could've very well been a console to sell above 60 million, and maybe around 70 million. At this point, I don't think we're going to get a killer app with Xbox already working on the next-gen console.
Oh stop. Expecting Xbox sales to be better then last gen seemed like a reasonable prediction. Most predictions thought the same and sales were even better the first couple years. Xbox 1st party was in a much better spot after studio acquisitions, no terrible controversy, didn't launch $100 more than the competition, better overall 3rd party support, and more. I don't think many people were expecting sales to drop so much in the 3rd year and continue dropping.
He's right though. We've had to endure hearing so much rubbish like the 12 TFlops. The velocity architecture. Starfield will be game of the generation and save Xbox. 30 fps is OK again because Most Xbox first party is 30fp now. We have every right to say "I told you so" and you don't have the right to tell others to "stop". You've done that to me as well. We aren't going to stop just because you told us to
"We've had to endure..." oh sorry Xbox fans are such a burden on you lol. Real world problems are nothing compared to Xbox fans haha.
your exactly right about the real world problems. In fact, peoples real world problems can be so bad that the only thing they have is video games. So, it would be nice for them to just exist in the gaming culture without seeing all the console war rubbish. Console war ended in 2013 anyway.
You're lack of self awareness is astonishing. You're the last person who should be accusing others of console warring.
You can't do console warring if there is no console war. Me saying "Sony won the console war and is the market leader " is not console warring
"You can't do console warring if there is no console war." Yet you prove time and time again to be always at the front line of the console war. Congrats, you're a hypocrite and cringy af.
Can't be at at the frontline of a console war if there isn't a console war. Sony won it years ago
Someone can be a console warrior regardless of their favorite plastic box winning or losing.
Someone is a console warrior due to several facts:
A. Always bring up how their favorite console won and/or better than the rest.
B. Talk about other consoles as being inferior.
Congratulations, you check off both boxes.
Completely disagree with that criteria. For example, the inferior technology in the switch, and the inferior sales of the Xbox, will directly influence their gaming strategy going forward. So, It's important to discuss.
Xbox Series has been a much better console than Xbox One in every way. The games are improving but they are not system sellers. Hopefully that changes after the upcoming releases
I agree. Xbox Series does have its issues, mainly releasing 1st party games in a timely manner and game quality needs to be consistently great. Most games are good, some even great like Forza Horizon 5 and Hi fi Rush, but Xbox needs system sellers like you said and good isn't going to cut it for those games. Hopefully this year is more consistent with quality releases.
Wrong. Series S is terms of power is closer to PS4 than PS5 and that is a major fail on MS's part. Xbox one was at least comparable to PS4 but XBSS is nowhere near PS5
Yeah but the Series X also exists which is more powerful than the PS5
I know XBSX exists too but all of their studios target the series s version first and just scale that version up for the series x. So really the X is just more of an S pro in reality.
Why some fiscal years are till 31st march and some like this is till june 30th ?
You can actually freely choose your financial accounting period, its just useful to align it to the tax year which ends 31st of March
Weren't people confident Gamepass grows like 25-30% every quarter? lol. Why's revenue down year to year without ATVI acquisition? lol.
Only hardware revenue is down, otherwise everything has seen growth. Revenue is up 51% and this is a result from the ABK acquisition.
1% isn't growth.
With inflation running at ~5% that would be correct. In real terms Xbox minus ABK went backwards.
I still think the price rise for GamePass was the biggest mistake.
A few things happened in quick succession:
- GamePass price increase
- PS supply opening up
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PS launching a GamePass equivalent
MS should have kept GamePass pricing low to keep a competitive edge and keep momentum going for their console sales. Every game outside of GamePass that is sold on a Series console nets MS a fee, and more units out there would have delivered more collected frees to make up for any shortfall on GamePass, not to mention the extra GamePass revenue itself from new signups.
Then later they could have launched a handheld and a pro, and a streaming dongle and kept momentum through to the next generation rather than having to build momentum from scratch.
I don't think the increase in Game Pass price of $2 has had any negative effect. Game Pass subs would still be about the same as it is right now. I would say a bigger factors of Xbox sales dropping was the console price increase last year and Ps5 5 supply opening up. What little momentum Xbox had, went away right after this happened. Sony gets away with a price increase because it's PlayStation and people will buy one regardless. Xbox doesn't have this luxury and they have to be competitive. Xbox needs to also release more bundles with their big IPs which they failed to do last year. No Starfield, Forza Bundle anywhere. Even a Hifi Rush Bundle would have been something. Only Diablo 4 had a bundle. Sony does bundles all the time with their big releases.
"But if we take away ABK.." that's not how this works.
It's exactly how it works for accounting and exec responsibility and the very reason they are currently reporting it this way.
They contribute the rise of revenue to ABK, but no where do you find ABK revenue separate from the rest of Xbox. ABK is merged with Xbox. Get use to it.
It doesn't matter that Microsoft didn't do the math for you, they already separated both revenues with a percentage which is the same. It's the same as not reporting the console sales or Game Pass numbers, they obfuscate what's embarrassing for them. Namely: Xbox decreased 4% and its software and services increased a measly 1%.
While you only care about what is precieved to be embarrassing, I'll look at the full picture. We know what Game Pass numbers are at so it's not some secret. ABK is now Xbox so using Twitter logic isn't going to change any of this no matter how hard wish.
You keep that thunderous applause going while Microsoft drives the Xbox hardware off a cliff. That's the full picture.
I honestly don't know why you aren't more critical of Microsoft when the only thing you can do is boast about its financials. Cheering for a trillion company killing off your console. Peak copium if you ask me.
Look, it's a quarterly report with a 51% revenue increase. The only negative from this quarter is the hardware drop. Other than that, numbers look good. I'm critical when I need to be like when they do something anti consumer. Not all the time like you are. You don't see me being critical of other companies unless it's warranted. Anytime I see you comment, it's always the same shit. I see you spin somethiny good into something bad. I could ask you, why never a positive word, even when Xbox does something right?
Is Esparadrapo a console warrior too? Maybe there's nothing positive to say because their console is in a dire situation and it's dying out, No problems, they'll get great revenues from putting their games on Playstation
I know I'm not going to change your mind but at least stop embarrassing yourself saying such nonsense. Microsoft is separating revenues because it's the only way to account a new source of income until it's integrated next year so they are able to compare apples to apples.
Otherwise, they'd just need to keep buying developers and publishers to have revenue increases. It doesn't work like that. You should know this but it doesn't help the narrative of Xbox doing any good since it performed -4% without ABK and -31% in hardware this quarter.
I'm fully aware there is a percentage breakdown of both. The problem is, you keep trying to make this more about revenue without ABK. I contributed the rise of revenue to ABK in my very first reply to this chain of comments. Your entire point is, "But without ABK.." When at the end of the day, ABK revenue is one in the same with Xbox now. Are you going to complain about this every quarter now? That would be hilarious.
You still never answered my question..
Revenue is not the same profit. Profit is Revenue minus the $69b they spent.
As much as you want this to be true, the only way it would be is if MS borrow money to buy ABK and then needed to pay it back. They used cash on hand. The money they make is the money they make and contributes to the rest of MS earnings.
They can't just ignore it because they used cash, it still needs to be accounted for like every expenditure.
They won't be accounting for the full sum in one period though, it will be written down over a long period, like 10 years or something.
Not only do they have to do this but it is absolutely in their best interest to do so. This expenditure will be reducing the overall profits and lowering their taxes.
They already paid Activision Blizzard. They had to pay each of her shareholders.
This is accounted for in Microsoft's Liabilities. Remembering that Assets = Liabilities + Net Equity
Anyone who looks at the company's balance sheet will see that there was a substantial increase from the beginning to the end of 2023.
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