Microsoft: The Xbox and games sector fell by 13% in the last quarter of 2022

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Credits: Louis-Philippe Poitras/Unsplash

Microsoft this week released the fiscal report for the quarter ending December 31 of last year. The data presented by the company. show that the North American company even achieved a slight increase in revenue compared to the same period of the previous year, but saw net income suffer a slight reduction.

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Microsoft’s total acquired revenue for the quarter was $52.7 billion. The value, which corresponds to approximately R$ 270 billion according to the current exchange rate, represents an increase of 2% compared to the previous year. Unfortunately, the company saw net income not exceeding US$ 16.4 billion, something around R$ 84 billion at current exchange rates and 12% lower.

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One of the possibilities for Microsoft’s profit decline is due to declining revenue from OEM Windows devices. This made the Microsoft’s overall gaming revenue declined 13% year-over-year. The drop in Xbox hardware revenue and the drop in Xbox content and services revenue certainly played into that.

The justification that Microsoft gives to investors is that there was a lack of its own content, in addition to a reduction in the sale of third-party content. This happened just a quarter after the release of Halo Infinite. Despite receiving praise from the community, it ended up being a far cry from what is expected of something from the blockbuster franchise.

The problem for the company is explaining why revenue from hardware sales was so lower than expected. The previous year, for example, the offer of Xbox Series S and Xbox Series X was limited, which justified the high amount raised. However, in the period disclosed by Microsoft, the distribution of the console was taking place normally.

Game Pass exceeds expectations and encourages Microsoft

The silver lining for Microsoft is related to the Game Pass subscription service, which appeared on the rise in another quarter. Without revealing specific subscriber figures, the North American company stated that growth was higher than the goals set for 2022. However, Phil Spencer himself stated that no matter how successful it is, the service will never exceed 10% or 15% of the total. the whole game business.

As the figures in the fiscal report show, if Xbox hardware and game sales fall, Game Pass will not be able to keep the numbers up. Amy Hood, Microsoft’s chief financial officer, said console content could drop multiple digits in the next quarter as Game Pass fails to offset falling revenue.

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