Xbox Hardware Just Had Worst Sales Dropoff In Years

Xbox Hardware Just Had Worst Sales Dropoff In Years

Microsoft has released its latest earnings report, and included in the document is an update on how the Xbox division is doing. Overall, Xbox revenue is way up thanks to contributions from Activision Blizzard, but hardware sales are down massively. And that’s not exclusive to Xbox, either, as PlayStation recently missed sales targets and Switch sales are trending down.

Microsoft said in its quarterly filing that Xbox hardware revenue decreased 31%, due to “lower volume of consoles sold.” According to GI.biz, this past quarter was the worst ever since the Xbox Series X|S launched in November 2020 in terms of a quarterly percent decline.

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Again, this downturn is not specific to Xbox. Circana, formerly known as NPD, reported recently that all three platforms–Xbox Series X|S, PS5, and Switch–are experiencing year-over-year declines in the US. All three platforms were down at a minimum of 19% year-over-year based on the latest publicly available data.

Microsoft, Sony, and Nintendo are now expected to be working on new hardware to help breathe new life into their hardware businesses. Xbox has already flat-out confirmed new hardware, while rumors continue to swirl about a potential PS5 Pro and Nintendo Switch 2.

In better news for Xbox, total gaming revenue increased by 51%, or $1.8 billion, thanks to growth in the Xbox content and services business. Content and services revenue specifically jumped by 62%, with Activision Blizzard revenue driving 61 points of net impact overall.

To put things into perspective, analyst Daniel Ahmad pointed out how, if Activision Blizzard were excluded, Microsoft’s gaming revenue would be down about 5% year-over-year. “You can see why Microsoft sees M&A as essential for growth,” Ahmad said.

Microsoft acquired Activision Blizzard in 2023 for a price of $74.5 billion. Not long after, Microsoft laid off nearly 2,000 people at Xbox. Microsoft Gaming CEO Phil Spencer defended the cuts, saying Xbox is a business, and his job is to increase profitability and shareholder value, even if that means laying people off.

Looking ahead, Nintendo will release its latest earnings report on May 7, while Sony is giving its own financial update on May 14, so it won’t be much longer until we learn how the Switch and PlayStation businesses are performing.

As for Xbox, it will hold a summertime games showcase in June that could include the next Call of Duty game and more.

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