Xbox division sales up despite 33% hardware decline

Software and services continue to drive gaming growth in third quarter

Microsoft posted a rise in gaming revenue for its third quarter ended March 31, 2019 driven by the performance of software and services, but partially offset by a decline in console sales.

Third quarter Xbox division sales were up $112 million or 5% year-on-year to $2.36 billion (£1.83 billion), thanks to a 12% rise in Xbox software and services revenue, primarily due the strong performance of third-party games and subscriptions growth.

However, Microsoft said this was partially offset by a decline in Xbox hardware of 33%, mainly due to a decrease in consoles sold.

At the end of the third quarter, Xbox Live monthly active users stood at 63 million, up from 59 million year-over-year, but down from 64 million in the second quarter.

For the nine months ended March 31, 2019 Microsoft said Xbox division sales increased $1.3 billion (£1 billion) or 16% due to software and services growth of 26%, mainly due to the strength of third-party games, partially offset by a decline in Xbox hardware of 8%.

Microsoft chief financial officer and executive vice president Amy Hood said: “In gaming, we expect revenue to decline year over year, driven by the tough comparable in Xbox software and services and the continuation of the hardware trends from Q3.”

The Xbox E3 briefing will be held on Sunday June 9. While it’ll include the usual mix of Xbox software and service updates, this year’s event is highly anticipated as Microsoft’s being tipped to reveal new console hardware it first confirmed at E3 2018.

It’s thought to be working on two next-gen Xbox consoles, codenamed Lockhart and Anaconda, which could be unveiled at this year’s show ahead of planned holiday 2020 launches.