The launch of the Xbox Series X and Xbox Series S consoles has been a success story for Microsoft's Xbox gaming division. Not only have the consoles themselves been a success, but they've served as the perfect vessel for increasing support for the Xbox Game Pass subscription service. Microsoft's Fiscal Year 2022 Q4 financial reporting has confirmed just how successful Xbox's efforts have been. The latest reporting confirms that Fiscal Year 2022 has been Xbox's best year ever.Industry analyst Dom shared some of his research on Twitter this past week, covering Microsoft's latest fiscal reporting for the fourth quarter of its Fiscal Year. According to Dom's analysis of Microsoft's reporting, Xbox reached a very healthy $16.22 billion in sales through July 2021 and June 2022.The news comes even as Microsoft confirmed that its fourth quarter results for the past Fiscal Year have dipped for Xbox. Revenue overall dropped around 7% this past quarter. Even yet, that quarter brought in around $3.45 billion in sales and was Xbox's third-highest of the past Fiscal Year. The 7% dip included Content & Services declining 6% while hardware sales lowered 11%. That's compared to Xbox's third quarter, which was its highest of the Fiscal Year.
Of the $16.22 billion in sales that Xbox brought in over the past Fiscal Year, Dom estimates that approximately 77% of it is from its Content & Services. Microsoft attributes the fourth-quarter decline in this area as due to "lower engagement hours and monetization" for both third-party and first-party games. However, it also says that Xbox Game Pass subscriptions increased during the fourth quarter, a promising sign hinting that the Xbox audience is simply looking forward to the next major game releases on the platform.
As for why Xbox hardware revenue declined this past quarter, Microsoft didn't elaborate on the reasoning. The two possibilities are, of course, that Xbox Series X/S sales are naturally decreasing due to being available for a good amount of time now, or that availability continues to limit the consoles' potential. Hardware may be held back for a bigger push during the holidays.
While the future is up in the air for Xbox, the fact that Fiscal Year 2022 has turned into the platform's most successful year yet is an incredibly positive sign. If anything, Microsoft's string of recent studio acquisitions has yet to fully pay off. The games being developed will only begin to arrive in 2023 and beyond. The Activision Blizzard acquisition should also close in the next Fiscal Year, giving Xbox Game Pass a boost and opening a range of options for increased Content & Services revenue. Fiscal Year 2022 may just be the start of Xbox's run of success.