Microsoft sees lower Xbox content revenue due to fewer third-party titles

Microsoft posted significantly higher revenues and profits in the past third quarter, but revenues declined slightly in Xbox services and content. The company explains this by pointing to a decline in third-party titles.

Sales in the Xbox content and services subcategory decreased by $128 million from the same period a year ago, a 4 percent decline. This is evident from the quarterly figures. Microsoft explains this decline by pointing to a decline in third-party titles. Probably not so much fewer titles, but fewer third-party games were sold. The company mainly refers to the strong last year in which many people were at home, which actually increased income at the time.

This drop could have been bigger, but Microsoft says it was prevented by sales of first-party titles and a growth in Xbox Game Pass subscriptions. Microsoft does not mention exact numbers. The last time the company mentioned the number of Game Pass subscriptions was in January; the fourth quarter of 2020 then ended with a total of 18 million subscribers. That was 3 million more than in September last year.

Things went better in the overall Gaming category. Revenues grew by $357 million, or 11 percent. Microsoft attributes this growth mainly to the increased sales of Xbox hardware, although the company does not mention numbers here either. Xbox hardware sales increased 172 percent, which is entirely explained by the higher price and sales numbers of the Xbox Series X and S consoles. In a verbal commentary on the quarterly results, CEO Satya Nadella says the Xbox Series S and X are the fastest-selling consoles ever.

As has been the case for some time, Microsoft’s Intelligent Cloud business is an important growth engine for the company. Revenues from this business grew 30 percent to $17.4 billion. Revenues from server products and cloud services were up 34 percent, primarily attributable to Azure’s 51 percent revenue growth.

Revenues in the Windows OEM category were down 3 percent from the same period a year ago. Microsoft says there is still ongoing PC demand, but the company suffered from supply issues, referring to chip shortages. Revenues in the Windows umbrella category were up 7 percent to $432 million, driven primarily by demand for Microsoft 365.

Microsoft’s total revenue was $46.2 billion, an increase of 21 percent. Net profit was $16.5 billion, an increase of 47 percent.