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The Xbox division generated its highest ever annual revenue of $16.28 billion during the 2021 calendar year.
Hardware revenue rose 63.3% year-over-year to $3.7 billion, with Niko Partners estimating that Xbox Series X/S consoles sold to retailers now total over 12 million units.
Content and services revenue was up 8.8% year-over-year to $12.6 billion. The increase was driven by a rise in Xbox Game Pass subscriptions and first-party game sales, partially offset by declining third-party software sales.
Xbox Series X/S systems continue to sell faster than any previous generation of Microsoft consoles, according to the company’s gaming boss Phil Spencer.
In a New York Times interview this month, he claimed persistent Xbox shortages were not actually a result of less consoles being produced than was the case in previous generations. Instead, scarcity has been caused by a surge in demand since the onset of the Covid-19 pandemic.
“When you think about trying to go get an Xbox or a new PlayStation right now in the market, they’re really hard to find,” Spencer said. “And it’s not because supply is smaller than it’s ever been. Supply is actually as big as it’s ever been. It’s that demand is exceeding the supply for all of us.
“At this point, we’ve sold more of this generation of Xboxes, which is Xbox Series X and S, than we had any previous version of Xboxes. So it’s our job to get the supply there to meet that demand.”
Microsoft announced last week that it intends to purchase Activision Blizzard in a $68.7 billion deal – the game industry’s biggest ever by some distance.
The acquisition, which will give Microsoft exclusive ownership of Call of Duty, Warcraft, Overwatch, Crash Bandicoot, Guitar Hero and more, is expected to close by June 2023.
Microsoft also announced that Game Pass now has over 25 million subscribers – up from some 18 million confirmed in January 2021.
“Upon close, we will offer as many Activision Blizzard games as we can within Xbox Game Pass and PC Game Pass, both new titles and games from Activision Blizzard’s incredible catalog,” Xbox boss Spencer said.