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Microsoft reported its fourth quarter earnings on Tuesday, when it said gaming revenue decreased $259 million or 7% compared to the same period last year, in line with its previous guidance.
Xbox hardware revenue decreased 11% and Xbox content and services revenue fell 6%, “driven by lower engagement hours and monetization in third-party and first-party content, partially offset by growth in Xbox Game Pass subscriptions”, Microsoft said.
“The decline you’re seeing in Xbox hardware is partly a reflection of the fact we had that launch… about two years ago, so with the supply constraints that we had seen over the last couple of years it has kind of extended out that period for consoles,” Microsoft’s director of investor relations Kendra Goodenough told The Verge.
“We’re still seeing strong demand, but coming off those highs that we saw in the last couple of years with the launch.”
Nevertheless, $3.45 billion in quarterly sales for Xbox represents the division’s second-best fourth quarter ever, according to independent market analyst @DomsPlaying.
“Assuming ~ $3.45B in quarterly gaming sales, annual revenue from Xbox reached $16.22B,” he tweeted. “While that’s down a bit on a rolling basis, it’s the highest fiscal year sales ever for Xbox.”
Three months ago, Microsoft’s gaming business posted record revenue for a non-holiday quarter. During its third financial quarter ended March 31, 2022, Xbox revenue was up 6% year-over-year $3.74 billion.
Microsoft CEO Satya Nadella said during the company’s earnings call on Tuesday: “We’ve sold more consoles life to date than any previous generation of Xbox and have been the market leader in North America for three quarters in a row among next-gen consoles.
“And we partnered with Epic Games to make Fortnite available for free via the browser. Over four million people have streamed the game to date, including over one million who are new to our ecosystem.”
It was recently reported that worldwide PC shipments experienced the “sharpest decline in nine years” during the second quarter of 2022, according to research and consulting firm Gartner.
“We did see the market weaken through the quarter, so that did impact our results,” Microsoft’s Goodenough told The Verge.
Microsoft said last month that it’s “on track” to release at least five first-party games in the next year, which would match or exceed its output in the previous 12 months.
That leaves at least three first-party Xbox games set to release before June 30, 2023.