Microsoft announced its financial results for the second quarter of the fiscal year 2023, including details on the performance of its Xbox business.
Declining growth... job layoffs... battling with FCC and other regulators...
Isn't it kind of early to experience hardware declines? I mean, the supply issues should be letting up now.
The economy was far stronger a year ago. Crazy inflation right now and lots of people losing jobs and struggling right now.
A lot has happened in the last 12mo, heck, a year ago the war in Ukraine hadn't even started.
Likely connected to the fact that séries X/S are sold on loss.
We’ll considering in 2021 they released halo and forza and in 2022 they released nothing to that caliber. It shouldn’t be surprising that a game console needs games to sell. Someone needs to tell MS that to make games lol.
But 2023 already is looking like a better start already so hopefully they keep it up or they shouldn’t be surprised their sales decline.
Im not exactly sure how they figure all that out but I know comparatively that the Series had a 21% increase in units sold to last year. There must be other stuff bringing the % down.
^ @darthv72, they've been selling the series S at a ridiculously low price for the past 3 months, which may help explain how units can increase at the same time as hardware revenue declines.
That said, their gaming revenue was down too, which would include gamepass. This could be the catalyst for the price rises Phil spoke of.
@brazz, these numbers are revenue so it has nothing to do whether it was sold at a loss or not. It's just plain sales numbers
It could be they are selling more XSS than XSX now since it's just revenue not unit numbers.
You only buy the console once. You buy games multiple times. Problem here is two fold, there are no big AAA releases and GamePass is cannibalising them as it has fostered “I will wait for GamePass” or “It’s free Day One on GamePass” attitude. In short MS made their own bed.
My guess? People just don't have a reason to purchase them, Sony and Nintendo consoles are still selling like hot cakes.
• Gaming Revenue Down 13%
• Xbox Content and Services Down 12%
• Xbox Hardware Revenue Down 13%
• 1st party and 3rd party content Declined
• Game Pass Subscribers Grew
“$4.74B in quarterly Xbox sales. The lowest since FY 2020 Q2”
Looks like the saying from 2011 was true after all.
“If we lose our way with Halo, we lose our way with Xbox," says Spencer
So after the huge expense of taking on Zenimax to barely move the bar in revenue, they're about to finally release a few games this year. Zenimax would have released those games to every platform, but not MS. They'll sacrifice a chance to finally get some sales by giving it away on GamePass and cutting out paying Playstation customers. Brilliant. If I was Satya, I'd have my foot up Phil's posterior right about now...
I think I (and many others) read this wrong. They are talking about this last quarter as it compares to the previous year for the same time. Not the year in its entirety. That makes sense now as I knew units increased over last year but seeing as they take a loss on the S more than the X, and the S sold so much more (cheaper point of entry) then they still had a decline in revenue while units increased compared to the same time in FY22.
This is what happens when you don't release the big games. This is what it always comes down to.
I know right? Like releasing Games for a Game console shouldn't be such a stretch
Crazy that a Software Company can't seem to make Software for its hardware.
This 100%. They have now like 15 -20 first party studios after all these acquisitions....Where the F are the games?. Zero excuses anymore, they are just a very mismanaged company in terms of there Xbox division and it is starting to show greatly.
Microsoft really don't understand the gaming business. Without exclusives, sales will decline. If you don't have exclusives to launch, purchase 3rd party exclusives the way Sony does. That's how you outsell the competition.
Contrary to popular belief, Phil really is doing a lousy job in front of the gaming division.
Microsoft need a great showing tomorrow, with quality exclusives.
Most people buying the cheaper Xbox and tons of people utilizing Game Pass instead of buying games.
I’m surprised that no one has put 2 and 2 together haven’t anyone noticed that since the ABK acquisition proposal Microsoft first party games have been basically non existence and the games GP gets are medium to low quality at best.
This is all part of the plan to lower their footprint on the market take a lost and go to court with a see we are loosing money and need this to slingshot compete with Goliath ( Sony ).
2022 was supposed to be the year of Xbox but as soon as ABK got announced games that was supposed to be ready to go all of the sudden needed more time to finish polishing pushing them to 2023+.
This supposed down time that we are having for some reason is only hitting Xbox hard because “they didn’t see it coming“ are they going to sit there and say “good for Sony to raise their consoles prices citing the economy but we’re good we don’t need the economy to run them into the ground “.
Is Microsoft Xbox leadership so inept that they couldn’t see what Sony saw a mile away or maybe I’m giving them too much credit
That is a interesting take. I wouldn't be surprised if this was true considering how full of shit MS has proven to be over the years.
@Ra3030 they’re a software company but not a gaming software company is the problem. They buy games and IP . Eventually they have issues having not grown a culture of making games but buying games . Halo is near death , Forza devs have all left , so they HAD to buy Zenimax . If those games start going downhill (some of them have been before purchase imo Fallout/ES being the biggest 2) then they will want to buy more IP which they are trying to do now .
Can't say I'm surprised really, the entire industry is going down in this economy. This will be a trend we see a lot as we enter into the Q2 financial reports season.
Microsoft isn't surprised either. This is pretty much in line with what they said it would be in October.
More like Xbox has no games to compel people to buy their products so the brand is stalling out. Companies like Nintendo and Sony are thriving month after month (Pokémon S/V just sold 10M+ units in under 72 hours and the PS5 hit 28M+ systems sold in just over two years and that's WITH supply chain issues). Not to mention even when you look at the industry as a whole, it's only down 5% Y-o-Y which means Xbox is struggling big time @ 13%. They're at almost triple the downturn comparatively, they're the exception not the rule.
Saving this comment. Let's see how well it ages when Sony, Nintendo, EA etc have their earnings calls :)
No one is immune to this economy.
"Not to mention even when you look at the industry as a whole, it's only down 5% Y-o-Y which means Xbox is struggling big time @ 13%."
That's... not how that works. Microsoft make up a small portion of the industry, so their 13% could be 1% overall.
@orchard, I am indeed interested to see hardware revenue specifically for Sony and Nintendo. All indications so far have been that those numbers have been INCREASING as console sales have increased as supply issues have subsided. Even with that, they can't keep the PS5s on store shelves. I thought the XSX was in the same boat, but that can't be based on these numbers.
Sony selling PSVR2 and the Edge controller is going to help in their next period as well.
@orchard, Sony will likely post a gain to their hw division while MS posts a loss. this is because the PS5 being the same technical specs between two skus vs there being a delta between the series s and x. No doubt people buying the series s are getting in on the ground floor and helping to increase those GP subs but they are doing so with the cheapest point of entry. those buying a PS5 are just deciding on if they want to spend that $100 for an optical drive or not. Otherwise they are the same machine.
In fact, i think both S and X are sold at a loss but obviously MS makes even less $$ on sales of the S than X (S is sold at an even more considerable loss than X) So if they sell 1m X at $500 vs 2m S at $300... you can see how even though they sold double the number of units, it only amounted to a $100m difference. Im sure they are happy to sell units but would be even happier if those were all X and not S. Either way it is getting units into consumers hands and GP subs in the process.
“That's... not how that works. Microsoft make up a small portion of the industry, so their 13% could be 1% overall”
Um, Thats not how percentages work. If you are down 13% on your own sales, and the rest of the industry is down 5%, you are doing worst than the industry. Doesn’t matter that you are a small part of the industry.
Yeah it’s pretty much in line with everyone else. They did release halo, forza in 2021 and 2022 nothing so no one should be surprised. But yeah they need big games to make sales up. They really shouldn’t expect the Xbox to sell like hot cakes if it doesn’t have big name exclusives. Maybe this year will be better for them. A game console needs a constant stream of games who would have thought.
They are giving us smaller games that are great like high on life, pentiment etc which is great for consumers but not good for their bottom line. They need big games as well.
Yep, they really need to make sure at least Forza + Starfield land this year. Can't afford for those to move out into 2024.
That's what I been saying for awhile now.
Look I know Redfall and Starfield needed to get delayed to polish up. It hurt MS, it's fans, it's console and services and overall fan fair last year. If Star Field and Redfall released broken and terrible. That would do long lasting damage beyond recovery and their console, sales, revenue would tank WAY more than it is now. Everything will be down and MS would might as well see themselves out on a permanent basis if they released those games in a bad state. A delayed game has a better chance of becoming good, than a badly rushed game.
@lifeX “ A game console needs a constant stream of games who would have thought. ”
Who would had thought that after over 20 years in the video games industry Microsoft haven learn that basic concept 🤦🏿
The economy isn't great but it's not as bad as some would lead you to believe.
Yeah, but...it's worse for Microsoft. It always is. Like the pandemic was the reason they weren't putting games out... and lockdown meant they had to fire 10,000 staff, despite Satya Nadella taking a 10% pay rise. It's not their fault. And now the FTC is being mean too, the big bullies!
Hasn't stopped playstation from releasing great AAA games since launch during a pandemic and cost of living crisis which can't be said for Xbox who let's be honest apart from Forza, they've released nothing of any note for 2 and bit years since launch.
Halo failed and although flight sim is fantastic it's not really the Xbox gamers type of game if we're being honest.
Can't say Im surprised either when here in the UK, both X & S are being sold at below retail rrp. For instance
This deal here. Is now expired but was a good £30 below rrp
And everyone knows series S is available less than rrp everywhere too.
Meanwhile playstation raised price by £30 and continues to sell well!
Not just MS but pretty much every major Tech company are dealing with declining profits hence all the layoffs.
This is just revenue. God only knows if there are any profits here
Mehh, if anyone can take the hit it's MS, they literally recorded record profits last yr with 187 billion dollars.
Lol people down voting facts
Interesting to see for how long MS will keep taking a hit from Xbox and covering up with windows money.
Gaming is the biggest entertainment media today and only getting bigger.
Ms will wear whatever cost they need too, to make it happen.
70 billion on acti is proof of that.
There in a position where unless you have multiple billion dollar failures they will be fine.
Which is why I love them in 3rd place, it keeps Sony honest, while at the same time giving us great value for money trying to catch up to sony with no risk of them going bust.
As consumer we win cause the competion is in the game and the ones in last place have endless pockets and can continually try and add more value.
They can’t be losing money forever on Xbox . Eventually they will split it off or sell it . .
Declines in both hardware and software revenue is bad news. This likely means the market share for Xbox isn’t growing. Looks like only Xbox One owners are buying Xbox Series S. Microsoft isn’t making up for last gen when Xbox 360 owners switched to PS4. We’ll see from Sony if this is an industry wide trend, but with PS5 finally selling on demand and God of War selling so well, I doubt it,
Also, it is unknown how many of the X360’s were dupe buys due to RROD, so it is possible that the X1 number might actually be their entire customer base.
its all up to starfield to save the day
No Man's Sky: Brown Edition
Sony doesn't feel that way. They tried to get Starfield as a timed exclusive for playstation let's not forget.
^ @The Fa3ces, can you provide a link to show me that, or are you spreading rumours?
At least in NMS you can take off and land on planets however and whenever you like. In Starfield you have to select a location and watch a cutscene, like in Ratchet & Clank lol
I remember when it was up to Titan fall to save the day. Then it was up to crackdown 3.
Hoping 1 game will do a miracle is pointless
One game may help subs for a couple months but won’t make up for the loss of a pull priced game .
by looking at the comments on this site it looks like it has taken a beating in viewrship. but thanks to good old xbox news it brings them back in
consoles make money of bulk software sales. because of gamepass eg nobody bought halo infinite where as it would have been a 8 million seller
Yeah. Good thing I didn’t buy it either.
Cough all eggs in one basket GP cough
They sold tons of consoles in the holidays but losing a tons of money on every single console. The huge cut in price of the s helped inflate sales, but it had a cost. Beside the fact not having a single new blockbuster game to sell...
This article describes "total revenue" (total sold), not profit ... So this means Xbox is not selling, has nothing to do with selling at a loss.
I'm sure Phil will blame this on the lack of owning Activision yet.
Time to think outside the box Microsoft.
Wait, WTF!? Microsoft Xbox Game Pass isn't printing money? I guess the rental service isn't the future after all. Isn't this the financial report from the same time period Microsoft was giving the Consoles away during the Holidays at way below cost and their still giving away them rental service subscriptions and they fired thousands of people. Now their begging the Courts to make Sony explain to them how to run a Gaming company. Things have gotten desperate for the Trillion Dollar Corporation under Phil Spencer.
Everybody but Xbox gamers know GP is bleeding money
I can smell the $19.99 price hike around the corner too.
if you have no games that drive sales and console sales ..
gamepass alone cant save them
Deleted, wrong thread
This is what happens when you consistently fail to produce new games. I have no clue why they bought all those game developers, other than to destroy them and weaken the gaming industry. Thankfully there’s Sonyin the gaming industry. PS5 > XSX
Knowing Phil, he'll spin this report as being awesome for gamers.
Yeah, and talk about how many gamers were playing, the amount that tried this and that game...