Microsoft’s gaming division reported a major decline in its 2022 Q4 earnings, but this is also the Big Tech company’s second-best-ever Q4 performance ever in regards to revenue. The report says gaming revenue decreased by 7% year-over-year ($259 million) and the company also saw an 11% decrease in Xbox hardware revenue. Microsoft Gaming earned $4.6 billion this quarter.
Microsoft says the decline is due to lower engagement hours and monetization in third-party and first-party content for Xbox, but the tech giant adds that this offset is in part by growth in Xbox Game Pass subscriptions.
Despite the significant decrease in revenue, this was a record-breaking quarter for Microsoft Gaming though, as it’s the division’s second-best Q4 ever in terms of revenue.
Microsoft’s chief financial officer Amy Hood and Microsoft’s director of investor relations Kendra Goodenough both said the decline was in line with expectations. Goodenough talked to Verge and said the following about the sales of Xbox hardware:
“The decline you’re seeing in Xbox hardware is partly a reflection of the fact we had that launch about two years go. So with the supply constraints that we had seen over the last couple of years, it has kind of extended out that period for consoles.”
Microsoft CFO Amy Hood says the results don’t include anything related to the acquisition of Activision Blizzard by Microsoft for $68.5 billion, since the deal is yet to go through. Hood believes the acquisition will be completed within this fiscal year though.
It’s especially interesting to see a significant decline in Xbox sales, as the latest generation Xbox Series X and S are generating decent revenue, even in Japan a market where Xbox One (the older console) failed to impress.
Microsoft and Xbox are working hard to make gaming accessible and break the barriers. In fact, Xbox announced that Discord voice chat is coming to Xbox Consoles soon.