Xbox Declines in March 2026 Quarter, Hardware Revenue Falls 33% - Sales
by William D'Angelo , posted on 01 May 2026 / 7,227 Views
Microsoft has released its earnings report for the third quarter of the 2026 fiscal year, which ended up March 31, 2026.
Xbox gaming revenue decreased 6.6 percent from $5.72 billion in the same quarter a year ago to $5.34 billion this year.
Xbox content & services revenue decreased five percent compared to the same quarter a year ago. This is inline with the forecast, which expected a decline in the mid single digits percent (-4% to -6%). Microsoft stated the prior year "benefited from strong first-party content performance."
Xbox hardware revenue dropped 33 percent year-on-year due to a lower number of consoles sold. This is inline with the forecast, which was for a decline. Microsoft did increase the price of Xbox consoles in most regions on May 1, 2025 and a second time in the US on October 3, 2025.
Overall for the quarter, Microsoft reported for the quarter revenue was up 18 percent year-over-year to $82.9 billion, operating income increased 20 percent to $38.4 billion, and net income on a GAAP basis was up 23 percent to $31.8 billion.
"When it comes to our consumer business, we're doing the foundational work required to win back fans and strengthen engagement across Windows, Xbox, Bing, and Edge," said Microsoft CEO Satya Nadella. "In the near term we are focused on fundamentals, prioritizing quality and serving our core users better.
"You see this in the work underway across our consumer products...And you also see this in Xbox, where the team is recommitting to our core fans and players and shaping the future of play. Last week's Game Pass changes are one example of how we are staying responsive to customer feedback.
He added, "We set new records for monthly Xbox active users in the quarter, as well as game streaming hours."
Microsoft's forecast for the quarter ending June 30, 2026 expects Xbox content & services to decline in the low teens percent (-11% to -13%) against a prior year that benefitted from strong content performance, as well as the recent price changes in Xbox Game Pass. Xbox hardware 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 follow the author on Bluesky.
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and i did not think it could get any worse.
"In the near term we are focused on fundamentals, prioritizing quality and serving our core users better."
24 years in the game, should have the fundamentals covered. But Sony has been slipping too. At least Nintendo knows what they are good at.
Xbox never really know what they were doing. Their whole strategy to win was opening their checkbooks and buying studios. They tried to start by buying out Nintendo. Now that they've hit a brick wall with that, they're floundering. Their one success was due more to Sony's mistakes than Xbox doing anything right.
xbox is the unwanted child nobody likes
microsoft owns windows, yet created a competitor to go after its own product
result: steam leads and nobody likes xbox on PC
the premise already is bad
microslop should quit and let valve handle West's gaming division
it's funny because they did the exact same with OpenAI, only to end up getting global hate with Copilot, a product that competes with OpenAI
you can't make that up, microslop = the epitome of sabotage
Fuck OpenAI AND fuck Microsoft.
" Their one success was due more to Sony's mistakes than Xbox doing anything right."
A gen they finished 3rd in, by the end.
For them at least it gave them a strong foothold in the UK and USA, they've always been pretty far behind basically everywhere else, this base was never going to last as they continued to flounder though
A great deal of the 360's sales came from Kinect, which was a gimmick.. Even before the Kinect-centered Xbox One came out, they were already well on their way to squandering the goodwill they'd built up in the Anglosphere. By that point, even Nintendo was moving on from motion controls.
What? Do you actually remember this time?
Xbox was already successful in the UK and USA long before the end of 2010. This was 5 years after it released.
Kinect caused 360 sales to spike massively. Holiday 2010 was the 360's biggest holiday season up to that point, and then the 2011 holiday season was even bigger and the first time the 360 came in first in worldwide holiday sales, ahead of PS3 and Wii. The 360 was dominating the US and UK markets during that time in a way that they never did prior to Kinect (at least in the USA). There's a reason, albeit a reason that badly misread the market, they built the Xbox One around Kinect.
I know Kinect was successful it was just odd to kind of attribute that to Xbox's success in the US and UK when it was already the case.
But yeah the addition of Kinect was moreso a death nail in their disastrous XB1 launch making the console $100 more expensive than the PS4 killed it
you know the X360 sold more games than the PS3?
Apart from the 360, M$ didn't sell any console expressively .
How is SONY slipping too? They sold 92,000,000 PlayStation 5 consoles, and that is considering component shortage and initial availability. When GTA6 comes out you'll see a huge "boom" on PS5 sales.
Sales aren't bad, I agree. Was more so referring to some recent individual games not finding audiences.
Still quite remarkable how they can draw 5.3bn in revenue, since their hardware is practically dead.
Ofc we still don't know about their costs for this revenue nor their operating income.
That multiplatform strategy is working wonders. How are they even considering changing that?
This is showing it is not working, 1 year on from when they started properly launching games onto PS and all of their users are leaving and not spending on their platform - the juice has not been worth the squeeze as a 1 off buy on a rival platform will never match having a consumer within your ecosystem buying lots of items
