The latter half of 2022 has so far been great for Microsoft, with the company’s gaming division reporting its best first quarter ever. This is the second year in a row that Microsoft broke its Q1 record for quarterly revenue.
Microsoft released its quarterly earnings report on Tuesday, October 25th. The company’s 2023 fiscal year began on July 1st, with the 1st quarter ending on September 30th.
As noted by the independent analyst @DomsPlaying, Microsoft’s gaming division brought in $3.61B in Q1, compared to $3.59B from Q1 of last year. This represents an overall growth of 0.47% since this time last year and sets a new record for Xbox’s quarterly profits. Hardware sales saw the most significant increase, with proceeds up 13% over the three-month period. Meanwhile, gaming revenue grew by a comparatively modest 4%.
This last quarter was not without its hiccups, however. Despite the steadily growing popularity of the Xbox Game Pass subscription service, the revenue from Xbox content and services still fell by about 3%. Microsoft attributed this decline to a lack of engagement with first and third-party properties and higher monetization. However, the company did not indicate how it intended to address these issues.
Still, a minor downturn in one sector did not offset Microsoft’s and Xbox’s growth in other areas. Microsoft's CEO Satya Nadella, who has led since 2014, remarked on the success of the company’s gaming division during a web call on Tuesday. He drew particular attention to Microsoft’s off-console gaming revenue, saying that Game Pass for PC subscriptions increased by 159% year-over-year. “We’re transforming how games are distributed, played, and viewed,” said Nadella, noting that over 20 million people have streamed games over the subscription service so far.
However, Game Pass’ success on PC doesn’t mean that Microsoft isn’t still invested in two next-gen Xbox consoles. Additionally, despite some developer pushback against the less-powerful Xbox Series S, it remains an essential part of Microsoft’s console gaming strategy. Nadella brought up Microsoft’s budget console during the call, projecting that the next quarter will see a significant spike in Series S sales. Said Nadella, “As we look towards the holidays, we offer the best value in gaming with Game Pass and Xbox Series S.” He also noted how around 50% of Series S customers are new to the Microsoft and Xbox ecosystem.
The last few years have been pretty big for Microsoft’s gaming division. Microsoft completed its acquisition of Bethesda last year, which bought 23 new game studios under the corporation’s umbrella in the most expensive acquisition in game industry history up to that point. The company has since followed up with a record-breaking $68.7 billion Activision Blizzard buyout. And while that merger is still waiting for regulatory approval, Microsoft’s fiscal year is off to a good start.
Source: VGC