Number of Xbox Live users increases, but console sales tailing off

Microsoft’s gaming division has posted an increase in full year revenue despite a relatively weak fourth quarter ended June 30, 2019.

For the full fiscal year, gaming revenue was up almost 10% year-over-year to $11.386 billion.

Another key metric, Xbox Live monthly active users, grew 14% year-over-year, from 57 million at the close of the previous financial year to 65 million.

However, the division’s annual results were dragged down by its performance in the last three months of the fiscal year.

Fourth quarter gaming revenue decreased $233 million or 10% year-over-year to $2.053 billion, largely due to Xbox One sales tailing off as the current hardware generation approaches its end.

Quarterly Xbox hardware revenue declined 48% year-over-year, “primarily due to a decrease in volume of consoles sold”, Microsoft said.

Fourth quarter Xbox software and services revenue declined 3% year-over-year “against a high prior year comparable from a third-party title, offset in part by subscriptions growth”, the company added.

Fourth quarter research and development expenses rose $580 million or 15% year-over-year, driven by investments in cloud and AI engineering, GitHub, LinkedIn and gaming.

Microsoft has invested heavily in Xbox services and hardware as it gears up to launch cloud gaming platform xCloud in October and its next-gen Xbox console, Project Scarlett in holiday 2020.

• Related: Xbox boss: ‘The business is not how many consoles you sell’