Microsoft Reports Declining Gaming Revenue Xbox Hardware Sales
The revenue for its Games revenues slipped 9 percent, according to Microsoft Wednesday, while Xbox content and services revenue dropped 5 percent in the second quarter of FY 2026. While making its earnings call for the quarter ended December 31, the company said it had ‘assumed 17 percent of its total revenue from its Cloud business, but Gaming division was also divided across different metrics’.
Xbox Records Decline in Q2
During the earnings call, Microsoft CFO Amy Hood confirmed that Xbox content and services revenue was below expectations and dropped 5 percent year on year. According to Microsoft, the decline was a result of “the lack of Xbox first-party content with impact across the platform” that led to this decline.
Xbox hardware revenues were 32 percent down from 9 percent, while Microsoft Gaming revenue fell 9 per cent. It expects Xbox content and services revenue to drop in the mid-single digits of its third quarter, saying it has said “strong content performance” from one year ago for comparison.
Microsoft said Xbox Game Pass growth is likely to be a part of the decline, which will partially offset this decline. Additionally, the Xbox owner says hardware revenues will continue to decline year over year for Q3 revenue. The company did not report Xbox Game Pass growth for the quarter.
Microsoft Revenue Up by 17 Percent
Satya Nadella, a Microsoft CEO, said the company was “devoted to providing great games across Xbox, PC, cloud and every other device.” Moreover, in the third quarter, “there were record PC players and paid streaming hours on Xbox,” he said.
This was compared to Microsoft’s overall business, which had $81 million in total revenue, with the Xbox decline. revenue of 3 billion 17 percent increase year-on-year. The Q3 operating income for the company was $38. 3 billion . Microsoft Cloud revenues were $51 per cent for . In the quarter, up 26 percent of s are 5 billion.
Microsoft’s own computing business, including Windows OEM and Devices, Gaming and Search and News Advertising, fell three percent. Sales of Windows OEM and Devices revenue increased by 1 percent for the year, compared to one percent in 2013. It said Windows 11 had 1 billion users in the quarter, more than 45 percent year-over-year, a company statement saying.
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