Microsoft reports Xbox revenues are sluggish in Q3

Microsoft released its financial earnings report for Q3 of fiscal year 2023 today. The report includes details about the fortunes of its different departments, including its Windows and Xbox divisions. According this report, Xbox content and services revenues are up about 3%, but the hardware division has dropped by 30%. However, the company overall shows growth as other departments pick up the slack.

According to the financial earnings slides, Xbox hardware revenue is down 30% in this quarter, or 28% in constant currency. Microsoft’s slides indicated that the decline in hardware revenue was driven by increased supply of consoles. Xbox content and services revenue is up 3%, or 5% in constant currency, thanks to Xbox Game Pass. Gaming revenue overall declined 4%, 1% in constant currency.

Microsoft CEO Satya Nadella said during the earnings call that revenue from subscriptions reached nearly $1 billion in the quarter, noting the expansion of PC Game Pass to 40 new countries. The company also highlighted its exclusive games that arrive in Q4, including Redfall and Minecraft Legends.

Another weak spot for Microsoft was Windows hardware and OEM, which declined 30% and 28% respectively. Apparently this is partially due to declining demand in the PC market. While Xbox and Windows hardware have dropped off, the report shows that Microsoft’s cloud services and office products have helped make up for this gap. Overall, the company made $52.9 billion in revenue this quarter, up 7% year-on-year.