
Xbox Revenue Falls 7% Year-on-Year, Hardware Revenue Drops 29% - Sales
by William D'Angelo , posted on 01 February 2025 / 4,041 ViewsMicrosoft has released its earnings report for the second quarter of the 2025 fiscal year, which ended up December 31, 2024.
Xbox gaming revenue decreased by seven percent year-on-year to $6.58 billion. This is inline with the forecast, which expected a decline in the high single digits percent.
Xbox content & services revenue increased two percent compared to the same quarter a year ago, driven by growth in Xbox Game Pass. This is slightly better than the forecast, which expected sales to be flat.
Xbox hardware revenue fell 29 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 revenue was up 23 percent year-over-year to $69.6 billion and net income was up 10 percent to $24.1 billion.
"We are focused on improving the profitability of the [gaming] business in order to position it for long term growth driven by higher margin content and platform services," said Microsoft CEO Satya Nadella. "And we are delivering on this plan.
"Black Ops 6 was top selling game on Xbox and PlayStation this quarter and saw more players in its launch quarter than any other paid release in franchise history. And we saw rave reviews of Indiana Jones and the Great Circle, which has already been played by more than four million people.
"We also continue to see strong momentum for Xbox Cloud Gaming with a record 140 million hours streamed this quarter. Game Pass set a new quarterly record for revenue and grew its PC subscriber base by over 30 percent."
Microsoft's forecast for the quarter ending March 31, 2025 expects total Xbox revenue to grow in the low single digits percent year-on-year. Xbox content & services is expected to grow in the low to mid single digits percent driven by first-party content and Xbox Game Pass. Hardware revenue is expected to decline year-on-year.
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 Bluesky.
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They spent $70 Billion buying Activision and a year after that deal closes they are seeing a 7% dip in earnings over last year.
Think about that… they paid $70 Billion for an asset only to experience negative growth within a year.
And also fired thousands of people in all the companies they bought. The problem is also that the last CoD is not doing well, it is completely discaratherized, they lost a lot of fans.
Dayum spending 70billion to own COD and giving it away on subscription for peanuts didn't do jack squat to change anything. the downfall is real
That's only 3 months of revenue for Microsoft.
I would disagree with that. Their hardware revenue fell 29% - but because of CoD, Game Pass, and other titles launched (both on Xbox and off), they were able to turn that into an overall decline of only 7%. As more titles launch closer on PS5 as Xbox Series, they will be able to offset completely each hardware decline - until eventually they exit the hardware market(?). I know I keep hearing about a next-gen Xbox, but man, does it really make sense to try again? Perhaps just go games-only, and make games for PS5/6, Switch 2 and PC?
The Xbox "content & services" revenue increased only 2%, and that was with a PRICE INCREASE last year too. I don't think Phil's plan is working.
When you read a headline but have no critical thinking skills... lol
"Critical thinking" aka racking your brain hard to find a spin on bad numbers , that's def a skill only a die hard shills would have.
These are my estimates for XBS global calendar year shipments (millions of units)
2020: 3.1
2021: 9.3
2022: 8.7
2023: 7.6
2024: 5.0
Total: 33.7
M$ stop fabricating XBox, the only market it still sells (poorly) its USA. Out of USA you dont find XBox on retailers, and the ones you find are terribly expensive.
Microsoft will never recover from the damage the Xbox One did to their brand. The height of incompetence , followed by all the damn spyware they're forcing into Windows 11. Terrible company.
No, it could recover but that would require a 180° turnaround. The only positive thing is that Ms is focusing on the best hardware. But what needs to change is:
1.) As sympatic as he is but get the fuck rid of Spencer!
2.) Seperate "Games For Windows" and "Xbox" (Console exclusives and PC exclusives)! So no multiplattform like games for PS5 and Switch and have real exclusives that don't release on PC.
Thats basically the main thing.
3.) Make it clear that you need an Xbox to play Halo, Gears, Forza...
4.) Revive old franchizes: Fuzion Frenzy could be a Mario Party Competition, give us Bloodwake 2, please get Kong Fu Chaos 2, secure Powerstione exclusive before Nintendo does it, make Powerstone 3 with an 8 player mode, bring light gun shooters.
5.) Keep out of the handheld market!! Sony had no chance against them and got slapped 2 times (Vita vs 3DS, PSP vs DS) so MS is even less likley to be sucessfull!!
Try this and i promise Xbox could get on par with Playstation over time...
Yeah, PC gamers with the freedom it carries. A portable Xbox isn't going to set the world on fire. A Microsoft branded handheld PC ain't going to benefit anybody but Valve.
The PSP situation is very nuanced...
I'm certainly not suggesting it was a failure... However, "80 Million" would have you think it was a smash success when it wasn't in terms of games sold... AKA profit.
PSP had up to a 50% hack/piracy rate... Meaning people literally bought the console without any intention of buying games lol
Here's a comparison of attach rate for each of Sony's previous consoles...
(PS1): 9.4 Games sold per console
(PS2): 9.6 Games sold per console
(PS3): 11.4 Games sold per console
(PSP): 4.3 Games sold per console
PSP was less than half the usual attach rate... and since games are where Sony make their money that definitely didn't benefit them
PSP still turned a profit. Thus it was a success.
Yes, PSP was sucessfull, but it was far from Sony's original expectations (I think we agree on the fact that PSP was not the promised "walkman of the 21 century", neither it was a "Game Boy Killer" when it "only" sold GBA numbers, a handheld that was barly supported more than 3 years). A MS Handheld doing "super well"? Well it depends on your definition of "super well". If you mean outselling the Gameboy, well if even Sony failed doing that with its handhelds, i have a hard time believing an MS handheld (lets call it Xbox Mobile) selling even 3DS levels, let alone the Switch.
PC gamers are "clamoring for handhelds"? The Steam Deck sold ~5 million in 2 years. The Vita did ~1,1 million and the 3DS did ~1,3 million DAY 1 alone! And the Vita was a flop. Vita sold ~ 18 million max and its known as a flop. I am not sure if we can call the Steam Deck a "handheld wich PC gamers clamoring for".
Do you understand my point?
Considering that PC gamers have historically laughed in the face of pre-builts and dedicated devices... If a handheld sells millions in the PC space, it's a big achievement.
The fact that you only picked and chose the Steamdeck for total sales where a dozen other "alternatives" to the Steamdeck have cropped up in the PC space and have gone on to be successful, really doesn't fly.
It can't be Windows based if it wants to succeed.
It needs to be a variant of the Xbox OS. (Which semantics... Is Windows based, but it's own fork.)
And thus have access to it's own library leveraging the Xbox ecosystem, that's the way Microsoft needs to compete with SteamOS, Steamdeck and Steam.
Didn't GamePass prices increase by over 15% ?
So does *Growth of GamePass Revenue by 2%" actually mean LESS GamePass owners now compared to last year?
sure seems like Microsoft should hire people from this website, im sure they can do a better job
LOL. Don Mattrick's face is getting more punchable with each of those grim Xbox news.
Not many people are aware that XBox has given up on many markets already, you can't buy XBox anymore, you can't find them on shelves. I'm talking about all South America, most of Europe and the Orient. XBox only sells (poorly) in the US. M$ has already given up on XBox, but they din't fully admitted yet. This are sad times, as PlayStation needs competition, it is best for the gamers.
The xbox brand is like a big meh for many gamers
Possible damage to Blizzard due to PoE 2 and Marvel rivals destroying diablo 4 and overwatch 2?
Satya Nadella is a great tech CEO, but man, he really thinks gaming is just another tech product
"We are focused on improving the profitability of the [gaming] business in order to position it for long term growth driven by higher margin content and platform services," said Microsoft CEO Satya Nadella. "And we are delivering on this plan.
What a sad quote. We want to companies to deliver great games, we do not care about "higher margin content and platform services"
This is a financial release for shareholders, not an E3 conference
Yeah, I know, and it sucks. He is not talking about bringing great games to the market, he is talking about "higher margin content and platform services".
Wow, xbox revenue is a tenth of microsoft, its revenue per year might not even match a quarter of net income for the full group... Nadella might look at the gaming part like its nothing for microsoft. Of course, it's nothing new, but it makes the xbox division feel so small that they could ditch them at any time and not even feel it. And i understand why they're pushing gamepass and not the hardware, the whole microsoft group is mainly a software company... Windows (among other things) prints money...
This FY25 his bonus for the gaming performance is 15% of the total. Depending on how high the target is he's bound to care.
they lost money by putting cod on gamepass on xbox/xbox app pc but hopefully for them they gained long term subs..
Perhaps they can reach that 200 million goal, lol.
For the sake of us real gamers, keep dropping you filthy satanic$oft!!
True
Except platforms that are redundant like Xbox. Xbox has three or four "exclusives" tops and all of them come to PC day one. The newer Xbox releases don't even have a legit physical copy. At least with PS5 I can own physical copies and play the game a year sooner. And PS5 has 11 good games that Xbox will never get. Finally, Xbox is actively porting it's library to PS5. Just get a PS5 and you're good.
PC is getting everything so ps5 is redundant according to your thinking.
If you don't mind paying for a glorified rental copy & waiting a year or two for certain games you are correct. If PC games still came on actual disks I would 1000% be PC and Switch Only.
PC only gets a few PlayStation exclusives and they are mostly "old games" or remakes. They earn most of the money with this exclusives on PlayStation, after a few years, they will get more money releasing it on PC.
PC has it's own developers and exclusives. Don't make false claims.
I didn't stutter.
Real gamers play all games, on all platforms.
Well then you aren't a real gamer because you don't play on a Jagaur, 3DO, Master System, Neo Geo Pocket Color, Ngage, etc. There's a massive list of consoles that are redundant or just not worth people's money. Xbox is among them.
Don't make blind assumptions without evidence.
I have gamed on all of those devices and I happily own most of them.
Real gamers again... Play on all platforms.
The stupid brand-loyalty is ridiculous... These are companies trying to get your money, they aren't going to send you cake and flowers for being a loyal customer.
I'm going to make a thread to show off retro game collections then. I look forward to you posting your goodies there.
For me it's not about brand loyalty. If I buy an Xbox I gain access to three games that I can't get on PS5. Is $500 worth access to three games? If I had an Xbox but not a PS5 I would miss out on 15 games. I would also miss out on having many physical copies because many games on Xbox no longer get a physical copy.
There have been many threads in the past on this forum where we posted our "gaming rooms". - Might be a good option for you to start there.
It is brand loyalty.
There are advantages to gaming on Xbox over Playstation or Switch outside of the games themselves. (I.E. Start looking at the bigger picture instead of having tunnel vision.)
Namely... Controller. There are a subset of users who prefer the asymmetrical control sticks due to comfort and ergonomics for games like First Person shooters.
Xbox Online being backed by Microsoft's extensive online infrastructure (Asure) with peering arrangements with providers across the planet to implement content delivery networks/caches to increase available bandwidth and decrease latency for content delivery is a big one... Something that Steam also does well funnily enough.
You also have other advantages like being able to play back CD Rom discs on the Series X and you have more extensive backwards compatibility.
Depending on game, the Series X release may look and run better. - Resident Evil 8 in Ray Tracing mode comes to mind, however that's game specific as there are many PS5 games that also look and run better, so depends on what you like to play.
You are grasping at straws here.
Analog stick layout is personal preference, not an objective advantage.
What makes you think XBL is better? Do you have actual evidence that PSN has worse lag than XBL? Like a scientifc study or some digital foundry article? Or are you just assuming that XBL is better? Can you provide hard evidence from the last four or five years?
Backwards compatibility is far from extensive on Xbox. I'm a massive retro-gamer and have been mulling over starting a collection of OG Xbox and 360 games. I made a list of the top 62 OG Xbox games according to metacritic and removed sports titles. 27 of those games DO NOT play on Series X. What's more is that when you put an OG Xbox disk into a Series X it is not playing the game natively. Your Series X downloads a new version of the game from the internet and plays that instead.
A few games looking or running 5% better is not worth spending $500 on another console.
I am grasping at straws? I never asserted that it was a personal preference or an objective one.
And like I pointed out, there are advantages to using one control stick layout over another depending on the type of game.
I never said Xbox Live is better. I said the underpinning network is better and this has been the case since the Xbox 360 era.
But sure. I'll bite.. Been plenty of studies done on networks, it's been a known thing for decades now.
So... Evidence and shit:
https://www.ign.com/articles/2016/09/09/xbox-live-faster-and-more-reliable-than-playstation-network-says-report
https://compass-ssl.xbox.com/assets/61/2f/612f2bb9-61d8-4b2c-9fe2-47c41d42c9c2.pdf?n=XboxLivevsPlayStationWhitePaper_2017.pdf
Backwards compatibility is more extensive on Xbox with a supporting library from the Original Xbox, Xbox 360 and Xbox One being playable on the Xbox Series consoles, often with included enhancements like Resolution, Framerate, Texture Filtering and more.
And correct, when you drop an OG Xbox disc into the Xbox One/Series consoles, it downloads a repackaged and emulated variant of the game.
Your disc is just providing the license.
But it's still factually better than Sony's approach.
Lol there's no advantage to using a different control stick layout.
Both your links go to the same place. Their methodology is both awful and not fully explained. They basically asked their test subjects which network felt more laggy instead of actually measuring lag. Also it's from last gen so it's irrelevant.
Lol no. The paltry offering of backwards compatibility with Series X is in no way extensive. There are only 56 XB360 discs that will "play" on Series X out of a total of 1333 retail discs. That's only 4% of the retail disc 360 library. Only 63 Original Xbox games out of 989 discs will "play" on Series X. That's only 6% of OG Xbox retail disc library. It's barely anything compared to the gold standard that PS2 and launch model PS3 presented (100% backwards compatibility), where everything played locally off a disk. Yeah modern Sony gives starving gamers a single spoonful of backwards compatibility and Xbox gives you TWO spoonfuls! Both are dogshit and to praise one over the other is ridiculous.
We need to get back to every console playing all games from all previous versions. There's no excuse. There should be scanline filters, the games should run exactly as they did back in the day, and you should have the option to run an improved version.
Edited for clarity and to introduce data from pricecharting.com to prove my point.
XBox is dead, RIP EX-Box ðŸ'€!!!
XBox is dead, RIP EX-Box !!!
The PlayStation controller is far more advanced than the aged XBox controller, not to mention the worst thing about it, still takes batteries. This batteries were available to public back in 1940´s, any device nowadays have a lithium internal battery.
From a conservation perspective, I think the support of AA batteries is a benefit, not a detriment. So it's interesting that you are using that argument.
For example, when my controller goes flat, I can just hot swap the AA batteries for fresh NIMH cells and keep gaming, completely wirelessly.
And when the AA rechargeable Cells eventually dies (Matter of when, not if...), then I can just swap them out.
Lithium batteries are good for around 1000 cycles, after that they can suffer significant degradation and your controller ends up living a cabled life unless you wish to dismantle it completely. (Can get technical.)
But the Xbox controllers do support Lithium battery packs as well, you have this thing called choice.
I would agree with this if Xbox controllers came packaged with rechargeable AA batteries. Having to buy a recharge kit is really a $20 hidden cost. Then expanded storage on Xbox is still at a price premium compared to other systems.
PSP made these same mistakes with charging cables and memory sticks.
But why play those exclusive M$ games on XBox X, when you can have a better experience playing those games on a PS5 Pro?
Why play on a PS5 pro when you can have a better experience playing it on PC?
Because PC doesn't offer physical games and building a PC for the same price as a Pro is impossible. Also because you don't have to wait for games that are delayed on PC and you don't have to deal with Denuvo.
That's like saying the Xbox Series S is a better console because you can't get a Playstation 5 console at the same price as an Xbox.
Physical is definitely a barrier for many, I'll give you that, but less important as time goes on, especially as no game on Playstation 5/Xbox comes complete on Disc anyway.
But the stupid price/performance argument was always a ludicrous slippery slope logical fallacy anyway.
Your analogy doesn't hold water. You can't build a PC at the SAME SPECS as a PS5 Pro for the same price to power ratio as a PS5 Pro. But you CAN buy a PS5 for a much better price to power ratio than the Series S. In fact I do believe the regular PS5 is double the power of the Series S at only a 50% price increase. Do you have any PC builds that don't cut corners and give you double the power of a PS5 Pro for only 50% more money spent?
doesitplay.org shows that 69% of PS5 games tested play just fine off the disk with no noticable differences. Yeah they are missing at least a KB of data most of the time, but they are complete on disc for pragmatic purposes.
How is it a slippery slope argument? With a Pro you get the most bang for your buck. If that was true for Series S I would say the same thing, but it's not.
It does hold water.
You cant buy a PS5 Pro console with the same specs for the same price to power ratio as the Xbox Series S.
Exact same logic as you.
...I guess we can keep going around in circles on this, but you done stuffed up with the slippery slope.
But can you have a PS5 run console quality games on mobile? PC Can. You have the Steam Deck and ROG Ally.
Can a PS5 Pro match the graphics of a high-end PC? Absolutely not.
"You can't buy a PS5 Pro Console with the same specs for the same price to power ratio as the Xbox Series S."
The price to power ratio is higher with a PS5 Pro versus a Series S. Your dollar goes further with a Pro or regular PS5 vs a Series S, when it comes to game graphics. I literally already said that but you chose to ignore it. CerebralboreSaid-"But you CAN buy a PS5 for a much better price to power ratio than the Series S."
So you are attacking a strawman at this point, instead of what I actually said.
If you think playing on the go is a better experience and fits your life better then by all means get a Steam Deck or Switch. Comparing stationary gaming devices with mobile gaming devices is an apples and oranges comparison though.
Who cares if it can't match the graphics of a high-end PC when a high-end PC costs three times as much for a bad price to power ratio?
Alright. Quantify the price performance differential of the PS5 Pro and Series X using verifiable metrics? If you are so steadfast in your reasoning, you should be able to provide the evidence easily enough.
In the end, you -still- cannot get a PS5 or PS5 Pro for the same price as a Series S.
Which is the same argument you are using that a PC cannot be had for the same price as a PS5 Pro.
Remember the PS5 Pro is just a mid-range PC.
Either way. Linus destroyed your PS5 Pro value argument anyway... As the PC offers better visuals (Plus cheaper games, free online, cheaper accessories etc')
https://www.youtube.com/watch?v=T4xAQGwpO10
Checkmate.
Quantify the price/performance differential of Series X? That's not the console we were talking about.
Once again you are attacking a strawman instead of what I actually said. I am making a price to performance argument. You are strawmanning it into a price argument and ONLY a price argument.
Cheaper Games? You don't own anything on PC. It's all a glorified rental. Used physical games are cheaper. Edit: Let me spell it out for you. Let's say I buy a $60 game on release and then decide I don't like the game. On a console I can sell the game for $40 easily using a fee free site like Pricecharting.com. On a PC I cannot do anything with the game since it's a digital copy and unsellable. Buying digital is like lighting money on fire.
Free Online? Online is not needed year round. Try again.
2 minutes into the video and Linus is admitting to using used PC parts. What a joke. You CANNOT be serious. A used PS5 Disc version is $320. So PC fans are allowed to use used parts, but Playstation fans aren't allowed to use used consoles? Do you even understand what an apples to apples comparison is? JFC dude.
Series S* Easy mistake that was easily identifiable, a small child would have recognized that.
I am not making a strawman argument.
Which by it's definition is: "refuting an argument different from the one actually under discussion, while not recognizing or acknowledging the distinction"
I am literally using your own god damn logic against you.
I am using your exact same argument against you.
I am using the exact same topic against you.
I am literally outlaying the distinctions.
Ergo, it's very much not encroaching on a strawman logical fallacy.
I suggest you read up on your logical fallacies here:
https://en.wikipedia.org/wiki/List_of_fallacies
Yes games are cheaper on PC.
And that is a blatant lie that we do not own our games. GOG.com is very much DRM free and 100% ownership.
Yes free online, with free games. Doesn't matter how often you do/don't use it, it's still free and available all year round on PC.
Try watching the video again, Linus made two separate systems, one using new components, one using used. Facepalm
Well in that case I don't need to provide evidence for a commonly known fact. You don't get to ask me for proof that Series S is half the price to performance ratio anymore than you get to ask for proof that the world is round.
Lol, yes you are using a strawman argument. My argument is a price to performance argument. Meanwhile you are trying to strawman it into solely a price argument.
"I suggest you read wikipedia"
I suggest you read an actual logic textbook like I did over a decade ago.
It does matter how often you use it. Because if it's not needed it's not needed.
Games are not cheaper on PC because you don't own them. What percentage of PC games are on GoG? There's about 10,000 games on GoG but 89,000 on steam. That means only 11% of the PC library is on GoG.
I didn't address his "new build" because it wasn't $700, which a small child could have figured out. Even by his own pricing at 18:52 in the video he admits it costs $904. Perhaps you missed that? Using PCpartpicker I put together his "new build". Edit: Some of his parts were out of stock so I went with the cheapest available substitutes. It's $990 and easily $1000 after a windows license. See Here:https://pcpartpicker.com/list/BrVdrM That's not the same price as a Pro but is the same performance as a Pro.
Edit: Personally I wouldn't even want the parts in his new build. A lot of them are not good choices. I would go with a fully modular PSU and 900 watts for various reasons. I wouldn't personally spring for intel either. Or a cheapo case. Or a stock cooler. Or a micro ATX mobo. If it was an IRL build for myself I would have to spend about $150 more just to be satisfied with quality parts.
But I was told the shift to Multiplatform strategy was to bring more revenue...