Xbox hardware sales are way down again in Microsoft's Q4, while gaming content sales skyrocketed again thanks to the company's acquisition of Activision-Blizzard last year.
The company posted its earnings today, which included a report of hardware revenue down 42% year-over-year. Hardware sales saw a significant dip of 31% year-over-year last quarter as well, though sales were up slightly (3%) in Q2 thanks to a series of holiday discounts and promotions. But hardware was also down 7% prior to that in Q1, and yes, dropping steadily for several quarters prior to that too.
For what it's worth, Xbox is far from the only console maker seeing dips in hardware sales. Everyone's impacted, according to Circana's most recent report. Xbox, Sony, and Nintendo all say "double-digit percentage declines" in May of 2024, and the Switch saw the most significant drop. This is likely reflective of the fact that all three consoles are on the back halves of their life cycles, and is reflective of fairly normal, cyclical industry trends. Xbox has already confirmed that a "next-gen" console is in the works, and has expressed plans to share more information about hardware of some sort around the holiday season.
Gaming revenue overall appears to be doing more than fine in terms of year-on-year comparisons, even setting quarterly records. This is largely due to the boost offered by the acquisition of Activision Blizzard – it wasn't there to make money for the company last year, now it is, so the numbers have gone up. Gaming revenue was up 44% year-over-year, but with 48 points of net impact from the acquisition, this indicates that Xbox's not-Activision-Blizzard-related business isn't doing quiiiiite as well as it was last year. Xbox content and services revenue faired better, up 61% year-over-year, with 58 points of net impact from the acquisition.
Overall, Microsoft's More Personal Computing division (which includes Xbox as well as other segments such as Windows) brought in $15.9 billion in revenue, up 14% year-over-year. Microsoft will hold its Q4 earnings call and field questions from investors and analysts shortly.
