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Xbox Content and Services Revenue Increases as Hardware Falls


Microsoft’s Xbox hardware revenues fell 30 percent year-over-year in the three months ending March 31, 2023, the tech giant reported Tuesday.

However, the company attributed the drop in sales to an increase in console offerings in the previous year, creating a difficult comparison. Xbox content and services revenue grew 3 percent, driven by better-than-expected third-party and first-party content revenues and growth in Xbox Game Pass, the subscription service that gives users access to Xbox games on consoles, PCs and mobile devices.

Overall, gaming revenue was down 4 percent year-over-year.

Revenue for the third quarter was $52.9 million, up seven percent year-over-year, and net income rose to $18.3 billion, up nine percent year-over-year. Both exceeded Wall Street expectations.

The positive earnings results came after Microsoft announced plans to lay off 10,000 employees, or just under 5 percent of its workforce, by the end of January, following in the footsteps of Amazon, Meta and more. The layoffs should be completed by the end of the third quarter.

At the time, CEO Satya Nadella cited a downturn in consumer spending, as well as anticipation of a difficult macroeconomic environment ahead.

“While we saw customers accelerate their digital spend during the pandemic, we are now seeing them optimize their digital spend to do more with less,” he wrote. “We also see organizations in every industry and region being cautious as some parts of the world are in recession and others are anticipating it. At the same time, the next great wave of computing is being born with advancements in AI as we transform the world’s most advanced models into a new computing platform.”

The tech company is also facing regulatory resistance to its $68.7 billion acquisition of gaming company Activision Blizzard. In December 2022, the Federal Trade Commission filed a lawsuit to block the sale over antitrust concerns. Speaking of the acquisition Tuesday, management said it “will continue to work toward closing in fiscal year 2023, subject to obtaining required regulatory approvals.”

Merry C. Vega is a highly respected and accomplished news author. She began her career as a journalist, covering local news for a small-town newspaper. She quickly gained a reputation for her thorough reporting and ability to uncover the truth.

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