Microsoft released its fourth quarter financial report last night, with revenues of $64 billion and a 15% increase over the same period last fiscal year. This is good news overall for investors, but if we look at the results of the gaming division, Xbox, the result is a bittersweet victory.
Between March and June 2024, the gaming division achieved a 44% increase in year-on-year profit, where the net impact of the Activision Blizzard King acquisition is 48 points. This means that, in the absence of the acquisition, profit would have fallen by 4%.
Overall, Xbox achieved a total FY profit of 61%, where the net impact of the ABK acquisition is 58 points. Much of this momentum comes from Game Pass. According to a Q&A with Satya Nadella following the report presentation (thank you, VGC), Microsoft’s gaming division has 500 million active users across all platforms and services. Next year we will no doubt see how users and markets respond to the implementation of the Game Pass new pricing and subscription tiers.
What worries us about these results is the alarming drop in hardware. Xbox consoles produced 42% less than in FY2023, and one possible reading for this is that Microsoft will put its future efforts into cloud gaming, and slowly but surely its position as a manufacturer will decline further. If we compare the current X Series momentum to the same period for Xbox One sales, sales are down 13%, according to Circana’s US market data.
Despite these figures, the company’s next hardware is planned to be unveiled this year, whether it is a portable model, as rumours claim, or the unveiling of the next generation of home consoles.
What do you think about this, and do you think Microsoft’s console policy with Xbox will change any time soon?