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Microsoft sees revenue drop as Xbox Series X looms

Xbox Series X

Microsoft has now revealed its financial results for the quarter ended December 31, 2019, as compared to the corresponding period of last fiscal year. This shows an overall growth, but some sectors seem to be slumping. The company saw revenues grow by 14% to $36.9 billion overall, while other areas sagged a bit. Earnings were up overall, which translated to a growth in both operating income and net income. There’s one thing to keep in mind though, not everything was roses for Microsoft. It seems the hype of the Xbox Series X has caused a dent in gaming revenue.

Microsoft says some of this growth is helped by innovations within their enterprise offerings. However, areas like the game division took a hit in terms of earnings. The overall Xbox portion of the Redmond giant decreased by around $905 million for the quarter. Also, hardware revenue fell sharply due to a “decrease in volume and price of consoles sold.” These drop-offs were around 21% and 43% respectively.

“We are innovating across every layer of our differentiated technology stack and leading in key secular areas that are critical to our customers’ success,” said Satya Nadella, chief executive officer of Microsoft. “Along with our expanding opportunity, we are working to ensure the technology we build is inclusive, trusted and creates a more sustainable world, so every person and every organization can benefit.”

Microsoft isn’t the only company feeling the heat of reduced hype in the build-up to the launch for new gaming consoles. GameStop, who has been reeling for years due to the slow death of brick-and-mortar retail, also blamed a revenue dip in 2019 on the incoming console generation. The veracity of this claim could be questioned though, as GameStop was struggling to remain relevant long before this, and that hasn’t changed.

The launch of the Xbox Series X is still months away, but people are nonetheless excited. Although it seems they aren’t as excited for Xbox-branded services. The overall services sector of the Xbox division pulled in $295 million, a drop of about 11%. The reasons are left vague, alluding to a “high prior year comparable, primarily from a third-party title.” 

Microsoft has seen some growth in their subscriber base for services like Game Pass and Xbox Live as well, to offset drops in other places. Although the tech giant did not explicitly state the full numbers. As of last year, these services had 65 million users.

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