Xbox Hardware Revenue Drops 48% Year-Over-Year For The Fourth Quarter

The big green brand or Microsoft’s Xbox hardware sales aren’t looking too good for the fourth quarter. According to two reports, the house of the Big M hasn’t been able to move more console units and has been on the decline.

According to the first website, which is gamasutra.com, the quarter ending June 30th saw the company document a $233 million decrease in game revenue — around a 10% drop from the same period last year.

In addition to the above, the website reports that that figure makes for just over $2.05 billion in game revenue, which is down from $2.29 billion during the same time frame as of last year.

Here’s an excerpt of the piece that Gamasutra posted regarding the Xbox hardware decline:

“Microsoft’s earnings report calls out a 48 percent year-over-year decline in Xbox hardware revenue specifically, noting that the shift was mainly due to a decrease in consoles sold during the quarter. Xbox software and services, meanwhile, fell by 3 percent year-over-year, offset partially by a rise in subscriptions. Microsoft notes that it had a strong Q4 in that category last year, which likely also contributed to the year-over-year decline.”

The second website following suit, gamesindustry.biz, adds on to the decline except with sprinkles of “good news” throughout the write-up. Here’s a section of the piece on Microsoft Xbox hardware revenue dipping 48% year-over-year for the fourth quarter:

“The More Personal Computing segment, which includes Gaming, saw revenue up 4% year-over-year to $11.3 billion, though gaming revenue dropped 10% to $2 billion. Xbox software and services revenue was down 3%, but the big highlight for this segment was that Xbox hardware revenue declined 48% year-over-year due to a decrease in console sales volume.”

Contrary to all the bad news, both websites report the company saw an increase in game revenue raking in $11.39 billion for the 2019 financial year, up from $10.35 billion in 2018. Monthly active Xbox Live users have also increased over the last year. As of June 30th, 2019, Xbox Live has 65 million monthly active users (MAUs), which is up from 2018’s 57 million.

All of the above regarding the decline of Xbox hardware sales and the increase of MAUs and Xbox Live subs should come in as no surprise given that the executives at Microsoft believe the number of gamers in the world sits at 2 billion.

Kareem Choudhry — corporate vice president of gaming cloud for Microsoft — notes that consoles won’t achieve that number since there are markets around the world that don’t abide by that lifestyle:

“We know we aren’t going to sell 2 billion consoles, and there are a lot of markets around the world where a console is not necessarily part of the lifestyle.”

To access “2 billion gamers,” the team plans to shift its focus, and that requires widening its platform spectrum. Satya Nadella, Chief Executive Officer of Microsoft, wants to bring its services and apps to as many people as possible, no matter the device.

Phil Spencer, head of Xbox, says that subscription services will “ultimately help game publishers,” because “they bring a new audience of people who might be willing to try a game but don’t want to invest the money upfront to buy one.”

In other words, as we reported back in March of this year, the Xbox team wants more live-service options across multiple devices given that consoles can’t reach an absurd amount of people.

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