Xbox Revenue Jumps 44% Year-on-Year, Hardware Revenue Falls 42% - Sales
by William D'Angelo , posted on 01 August 2024 / 13,254 Views
Microsoft has released its earnings report for the fourth quarter of the 2024 fiscal year, which ended up June 30, 2024.
Xbox gaming revenue increased by 44 percent year-on-year. This includes "48 points of net impact from the Activision acquisition." This is inline with the forecast, which was to see growth in the low to mid 40s percent.
Xbox content & services revenue increased 61 percent compared to the same quarter a year ago. This includes "58 points of net impact from the Activision acquisition." This is slightly better than the forecast, which was to see growth in the high 50s percent.
Xbox hardware revenue fell 42 percent compared to a year ago. This is inline with expectations, which was to see a decline year-on-year.
For the entire 2024 fiscal year, Xbox gaming generated $21.50 billion. This is up from $15.47 billion in 2023.
Overall, Microsoft reported for the quarter GAAP revenue was up 15 percent year-over-year to $64.73 billion and net income was up 10 percent to $22.04 billion. For the entire fiscal year, Microsoft reported GAAP revenue was up 16 percent year-over-year to $245.12 billion and net income was up 22 percent to $88.14 billion.
Microsoft CEO Satya Nadella in the company's earnings call revealed there are now over 500 million monthly active users in gaming.
"Now onto gaming," said Nadella. "We now have over 500 million monthly active overs across platforms and devices. And our content pipeline has never been stronger."
Microsoft's forecast for the quarter ending September 30, 2024 expects total Xbox revenue to grow in the in the mid 30s percent year-on-year, with 40 points of impact from Activision Blizzard. Xbox content & services is expected to grow in the low to mid 50s percent, which is driven by the net 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.
More Articles
42% drop in hardware. The Xbox series is expected to sell less than 50 million globally
It's not going to reach 40 mil.
The XSeries consoles are selling worse than the 360 did in 2013. Basically, it's selling like a console at the very end of it's life
does gamepass have anything to do with console sales?
360 in 2013 ? It's selling worse than even XB1 in 2020 ..
…are you srs? XBSX is performing worse than XBOne in its final year?
I’m guessing labeling all of Microsoft’s gaming division as “Xbox Gaming” is just their way of camouflaging the failure of the Xbox brand.
I'll have to admit:
Being a videogamer, competition is great.
Wether in multiplayer nor in the gaming business. So I wish Xbox, Nintendo and Playstation to stay.
However:
I kind of enioy witnessing an often criticized trillion dollar company buying out third parties worth billions and billions and throwing GP at people, yet still not getting a grip in the console market.
I can't buy me nothing from a company's status being worth a trillion dollars. But I profit from companies competing with them.
Playstation and Nintendo can definitely improve in a lot of their customer practices, no doubt.
But compared to the Xbox Gaming Division, I suppose they couldn't be happier.
I am excited to witness the dark realms the Series numbers will only slide into going forward.
It's already a 4:1 ratio this year compared to PS5. This has never happened before.
I more or less agree with everything you said, but with your last sentence: it has happened before. The ratio between ps2 and xbox [original] was still worse.
Activision doing the most lifting it seems.
The October - December Quarter will tell the full story (maybe)
I'm not sure Xbox Series will even sell 5m units this year... This is less than half the hardware revenue of the same quarter in 2022. It's dropped so damn fast.
M$ bought Activision for 68.7 Billion (68,700,000 million), if it makes 100 million annual profit on COD sales, which I don't believe, it will take 6870 years to see the money back. By that time, humanity will probably have already moved to another planet.
Actibliz should be able to make around 2 billion a year in Profit. Its a well oiled machine at this point. I think we will we be extinct in 6870 instead of reaching for the stars.
So they earn more money while selling less hardware? At this point, MS is probably seriously considering abandoning the console race and pulling a Sega (using the Xbox brand to maybe sell controllers, console keyboards, premade PCs...).
With the trend of moving half the units of 2022 for two quarters in a row the next quarter is going to be a bloodbath since Microsoft doesn't have a Starfield to soften the fall. With the correction it could be easily -60%.
There's Avowed and Indiana Jones but I can't imagine they'll have the same effect. Starfield really was one of the most hyped games I'd ever seen before
None of them are scheduled for this quarter.
When I check the avowed launch date it says "fall 2024". Q3 runs until September 30'th, so that's in the fall isn't it? So, not impossible for it to launch in Q3 this year
Developer blurted nov 12. So no, nothing for Q3.
And now it's feb 25. Sooo... yeah.
The end of an era,
Jeez sad to see competition go,
Fire Phil Spencer bring someone to revive hardware and first party games jeez what an absolute drag
Well, their hardware will flop even more with their GP price rises. MS was always terrible for the console gaming business.
For years now, Xbox has been a subscription company first, a console company second
Console is not as important to them as it used to be - and definitely not as much as some people here put importance on consoles
It makes less and less sense to own an Xbox since everything is on PC now, and more and more people are buying gaming PCs.
Considering that the Xbox was originally created to push PC gaming, I'd say mission accomplished Microsoft, you can now lay the Xbox to rest.
It's incredible... having a net profit of US$22 billion is scary for many companies that are competing with Microsoft in some sectors. It's worth highlighting AI and cloud computing that help this revenue growth, but the XBox division itself is already sustainable... put all Activision Blizzard games on all platforms and you already have a sustainable segment.
I think that for Microsoft's gaming sector, all that's left is to acquire studios focused on the mobile segment to generate more revenue.Of course, acquiring small studios should be in the plans, but it shouldn't be a priority.
idk I feel like acquisitions are the last thing Microsoft needs to be focused on. They just shut down three studios in May, and there have been rumors about closing even more (e.g. the team behind HellBlade 2).
I think you're not up to date... if they're going to close more studios, then why are they opening another one? I've already said... "Microsoft is a company worth trillions due to the team of professionals it has, so analysts must have seen that it wouldn't be beneficial to keep some studios, but there are benefits in opening others"...
In my opinion, the company has already seen that it will fail in the console segment, but there are new ways to play, such as cloud gaming. I believe that cloud gaming and cloud computing will replace many current hardware, or create a new segment that will be more profitable than the current one, as it will have the capacity to include more people, especially if the price for the service is fair. The current success in a segment, in this case consoles, may not last long in 10 to 20 years when telecommunications technologies will be able to transmit and receive data at much higher speeds than today.
Note that Microsoft always has a real scenario close to what was predicted, but they are not considering abandoning the gaming segment. Therefore, I think that more acquisitions, opening studios, creating a separate cloud gaming plan (xcloud) from Game Pass, opening a mobile store, forming partnerships to put the Game Pass app on smart TVs and other devices, being able to integrate mobile, PC and other platforms into an ecosystem, creating new Game Pass plans to include more people should be in Microsoft's plans. We are talking about a company that is one of the pioneers of cloud computing and AI, that is, currently in the console segment, Playstation and Nintendo are winning, but this could change if the console segment loses its relevance over time. I have already posted in an article that consoles are stagnant, and with each generation they lose a little more relevance.
not going to comment on the second half of your claim, they don’t seem relevant to our discussion; however, “if they're going to close more studios, then why are they opening another one?”, what do you mean? Are you talking about that Elsewhere Studio they announced? Firstly, this is Activision (who is under the ownership of Microsoft) opening a new studio. Secondly, this came one week after having shut down three studios…laying off three studios and opening one still leaves a net loss of two full studios.
“Microsoft is a company worth trillions due to the team of professionals it has, so analysts must have seen that it wouldn't be beneficial to keep some studios, but there are benefits in opening others.” I’m curious, how would it be more beneficial to close three studios full of highly talented developers, just to open a new studio entirely from scratch (specifically in Poland, where labor costs are cheap)? Surely it has nothing to do with “pinching pennies” and maximizing profits first-and-foremost…it must be because Microsoft genuinely believes that tearing down three good studios in exchange for an entirely new studio will benefit gamers.
“acquiring small studios should be in the plans” But small studios don’t have well-established IP. What purpose would they in acquiring such a studio? If you’re saying that Microsoft should help subsidize indie devs, then I would agree. This would provide them with solid 2nd party support, costing Microsoft far less than running the studio as well as giving Microsoft publishing rights on some good games. (And, most importantly, subsidizing small devs is an obvious benefit because these devs typically don’t have sufficient funds to complete their projects.)
Article about the opening of another studio that is not Elsewhere Studio.
https://www.vgchartz.com/article/461868/playground-games-opens-third-studio/
I think this ends the argument that the division is undergoing a divestment.
I even agree in part about the loss of qualified labor by closing the 3 studios, but Microsoft already has the IPs consolidated and can open studios where it thinks the labor is cheaper and as talented as the old labor. In fact, in some closed studios, part of this labor was absorbed into other studios, so there was no total loss of labor. Companies open and close branches in various parts of the world, this is due to more expensive labor, people's qualifications, laws, local infrastructure, taxes... there are several factors why companies open or close branches in other locations, but if you ask me about the closed studios, I can't say why they closed, because I don't work at Microsoft. I think this answers the first and second paragraphs.
The same argument you make about Microsoft closing studios or laying off employees, I can also make about Sony. Below is the article about another 220 employees being laid off.
https://www.vgchartz.com/article/461880/bungie-lays-off-220-employees-155-to-move-to-sony-interactive-entertainment/
There is no way of knowing why Sony is doing this, especially when the company, according to several people here on the site and the media itself, says that the company is breaking records, that it is the best generation. When I see that the XBox console has fallen by 50%, I am not surprised or worried, but I would be worried if the division resulted in a loss, something that is not happening. I will be honest... I think Microsoft will focus on Game Pass and XCloud (cloud gaming), because this way it does not need to spend on research and development, guarantees a constant flow of revenue, can be on as many platforms as possible, consequently, the increase in revenue will be certain.
Finally, I will talk about acquisitions and openings of studios... Microsoft needs constant content, because the soul of a successful service is content. Small studios can develop cheap games, but that attract an audience that likes indie games or that is younger, thus generating revenue and being able to invest in more big-budget games. I believe that with the advancement of technology, each user will no longer be able to share their account, and physical media will die out. Soon, companies will have control over the user. Furthermore, piracy will be more difficult. However, Microsoft and other companies can create a family and friends plan that is cheaper for everyone. More studios with a greater diversity of games can reduce dependence by establishing exclusive partnerships with third-party studios, which today is a waste of money for Sony or Microsoft... This model is only good for Nintendo with a different audience.
If you could subscribe to a cloud gaming service, and that service allowed you to play any game at 4K and at least 60 FPS, would you buy a console?
If that service allowed you to access your game library on Steam, Epic Games, GOG, Windows or XBox store, and also had a price tag of US$ 10, would you buy a console?
If the service allowed you to start the game on a TV at home, then continue the game on a PC/laptop, and finally continue playing on your tablet/smartphone, would you buy a console?
I think something close to that will happen.
I want to have access to my games any time.
Wether if through installation on PC or console or because the code is on a disc.
Cloud gaming doesn't provide this quality, probably never will.
This is my personal perceiption of Cloud-Gaming, without bandwith issues even mentioned.
I couldn't care less about 4K/60 via cloud.
And as long as PCs will exist and customers want to own their games physically/non-clouded, consoles won't go anywhere just because Microsoft is forced to go somewhere else because their hardware isn't selling.
revenue up and console sales down, can that be good since they lose or break even on console sales?
the future has no consoles!
Xbox revenue YOY would be down without Activision. Activision will make the stockholders happy for the next few quarters when it shows a 44% increase but once Microsoft owns Activision for more than a year the YOY numbers will decline and investors will not be happy.
Essay Pro