January 24, 2023
Microsoft announced on Jan. 24 that its second-quarter (ending December 31, 2022) revenue from its Xbox gaming segment grew $684 million, or 13%, to $4.76 billion from $5.44 billion Dollars declined over the year-ago period, driven by declines in Xbox content, services and Xbox hardware — including Microsoft Movies & TV content transactions.
Xbox is part of Microsoft’s “More Personal Computing” business segment, where second-quarter revenue fell nearly 19% to $14.2 billion from $17.5 billion in the year-ago period.
Microsoft attributed the decline in revenue from content and services to strong prior-year revenue from first-party game launches, which were eroded by declines in first-party content and a lower monetization rate for third-party content, as well as a 13% decline in Xbox hardware revenue. partially offset by growth in Xbox Game Pass subscriptions.
On the bright side, Xbox Game Pass subscriptions hit a record 120 million monthly active users during the quarter.
“We’ve seen new highs in Game Pass subscriptions, game streaming hours and monthly active devices,” CEO Satya Nadella said on the fiscal webcast.
For the six months of the fiscal year, total gaming revenue declined $667 million, or 7%, due to declines in content and services and Xbox hardware. Revenue from Xbox content and services declined 8%, driven by declines in first-party and third-party content, with a lower monetization rate and engagement hours, partially offset by growth in Xbox Game Pass subscriptions. Xbox hardware sales declined 5% due to lower prices on consoles sold.
Microsft, which plans to cut 10,000 jobs at the company in 2023, said it will see $800 million in severance costs in 2022.
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