Microsoft Gaming Revenue Declines 7%, Xbox Hardware Down 29% Year-on-Year

Microsoft announced its financial results for Q2 of fiscal year 2025, including an update on its gaming business, with growth in Game Pass not enough to compensate for a massive drop in Xbox hardware revenue.

[ocelot07]

GP only grew 2%? Even with COD releasing on the service?

[CrashMania]

@abriael, he's getting downvoted for creating alts and spamming the site on a daily basis lol.

[jznrpg]

Revenue grew by 2% That’s not good. They don’t say if there is any actual profit and what the operating costs are because it wouldn’t be favorable for their stock price. If it was good news they would be more detailed in their numbers

[Plague-Doctor27]

2% revenue growth was for all content and services, not just GP. So no idea if game sales were down 8% but GP subs were up 10% or w/e. Still, flat growth after a 12% price hike in GP and COD sales being up 60% YoY, these are not good numbers

[1Victor]

Well it’s not too late to go SEGA drop the next console and go full publisher and hope that Sony and Nintendo allow GP on their consoles.
They could also try to run in the knees deep muddy water and release a new console in the hopes it takes up like the 360 and turn everything around to what they want but realistically if they go with option B and fail it will be the end of Xbox consoles and perhaps the brand as well as no one call their service Xbox/PC game pass just game pass 🤷🏿

[SeTTriP]

The 360 turned nothing around, the numbers where inflated.xbox was never a competitor, it just sounds good when making headlines.in reality Xbox has a 40 to 50mil user base per generation and that needle isn't moving.thats scraps in the gaming industry, way to much overhead.

[mudakoshaka]

People are not playing rainbow CoD. I started the campaign but as soon as I saw all the old, cool male characters either in a wheelchair or portrayed as a ”white devil”, I shut that shi* down.

[MrNinosan]

GP didn't grew, GP actually declined but Revenue grew due to the price hike.
Most likely, GamePass are down to around 30 million users now, down from the 37 millions or so 2022.

[FinalFantasyFanatic]

They spend a lot acquiring COD, which people bought/played on PS anyway, then you have to keep acquiring games to feed the GP monster, then you look at the state of AAA games lately and whether people want to actually play them. Plus, Xbox hasn't released many must play exclusives, and not many people are interested in their hardware (except for those that buy all the limited edition consoles and controllers for some reason).

Also doesn't help that we have a cost of living crisis too, it's understandable that they would be struggling.

[Chevalier]

But all the Xbox fans told us just this week that Xbox was doing amazing?! Some more crow being served now as a main course

[crazyCoconuts]

This was supposed to be the culmination of Phil's strategy: COD on GamePass.
Didn't move consoles
Didn't move GamePass
Made less money than last year even with the Indiana Jones blockbuster there to prop it up

Change is a'coming

[Abriael]

What you're reading doesn't mean what you think it means.

[Eonjay]

It sounds like revenue went down because last year Call of Duty was not a part of GamePass. It also sounds like Gamepass was not able to mitigate the losses. Let's not also forget that GamePass got a price hike YoY. So to have it go up only 2% is really odd considering COD was seen a potential driver for GP. It's a real head scratcher.

Hardware fell by 29% but gaming revenue only fell by 7%. I couldn't figure out what was keeping their game Rev so high in comparison (given the lackluster GP increase) but the answer is obvious: it's PlayStation. It's a treasure trove for Microsoft.

[badz149]

Indiana Jones was not a blockbuster sales for them. It debuted 14th in the US, remember?

[blackblades]

Most probably said they'll wait for the ps5 version. They might as well release on same day at this point. Keep Xbox console around for those loyal suckers like colteast and the others and still release on other platforms same day they'll be shell shocked

[badz149]

xbox consoles are for those paying for GP (most probably Ultimate at this point because the lower tiers suck!) and they are getting their games on there day 1. hardly suckers IMO. now just how many Day 1 releases they are getting per year, however, depends on MS's generousity.

let's be honest, the allure of GP is tempting but for those not having as much time to game like when we were younger or those gaming focus Youtubers, the offer falls flat on its face considering we will NEVER have time to make paying feels worth it.

[Destiny1080]

xbox sales down 30%

Playstation sales up 30%

[Aloymetal]

Color me surprised.
Gamepass is almost 9 yrs old and still hasn't turned any tables, I think it needs another 20 yrs in the market to make a little dent. Lol

[ironmonkey]

Lol

[Knushwood Butt]

Oof.

Looking forward to neutralgamer's take on this:

'Microsoft's recent decision to allow Xbox exclusives on PlayStation and Nintendo platforms seems to reflect their shifting business strategy. With a massive investment of $80–$100 billion and a diminished market share, it appears Microsoft is prioritizing revenue over hardware sales.'.

[thesoftware730]

2% seems low to some of you, but but if I recall GP had 34mill subscription across Xbox and PC...let's say that number remains the same, that would mean that they added 680,000 new users..how is that bad? Potentially adding $10-$13.5 million to the overall pot.

That is a fair adoption rate for GP especially for one game, considering that some people actually paid full price for the game on Xbox and PC, and the lions share coming from PS.

Revised**

[LG_Fox_Brazil]

To be fair that's kind of a bad number for a service that just got the most sold franchise in the industry. MW2 Remake sold more than 11 million copies in three days, and now Black Ops 6 was not able to convert even 1 million into the service population. Don't get me wrong, that's still a ton of cash headed to MS, but it would surely make the GP seem bad to the big guys at the company

[Rols]

The article quotes a 2% increase in revenue not GP subs. The tiny increase in GP is a disaster after you release the latest COD and Indiana Jones. A nearly 30% drop in console sales is disastrous.

[dveio]

They've had worse drops in hardware already, even above 40%.

So it's an improvement, riiight?

[mudakoshaka]

10-15 million dollars to their pot is like adding 1 dollar to your pot. Will it make a difference?

[MrNinosan]

2% revenue, not users.
So the 34 Millions is actually less now.
The price hiked way more than 2%, which equals less subscribers who pays more.

My guess is around 30 million GP users.

[Cockney]

The game pass price hike was more than 2% so in reality im guessing gamepass numbers are down

[andy85]

Because they didn't spent 70 billion to gain 2%. Simple as that. Wasn't their projection 100 million subs in a few years. That 2% needs to become 30% per year. Every year. (Also wasn't it revenue not subs, with the price rises that actually means that subscriptions have dropped because the price hasn't risen only 2%)

[OldDuffer]

Weren't prices last year before the increases? If that's the case then subs actually went down and the 2% comes from the increased prices...

[spoonard]

It's bad because those numbers are from PC GamePass, not Xbox. How do you add 600,000+ when your hardware sales are dropping like a rock? There will be no next gen Xbox.

[Chevalier]

That's 2% revenue against increasing overhead though. Plus the price of GP increased so no that's absolutely awful. Plus that's revenue not increase in GP users

[Reaper22_]

Lol .you guys are salty cause Microsoft is making a lot of money.

[dveio]

You know.

It would be progress if we could at least finally see in such a report how high the operating profit or loss actually is.

It is ironic that the company cannot manage to list this data using Excel & Co.

[badz149]

LOL. THAT's your comeback? Seriously?

[mudakoshaka]

On what? Windows for enterprises and HoloLens for the military? They are not making money off the gaming division.

[MrDead]

Can you tell the thousands of devs fired because of MS's massive industry consolidation about how much money MS is making, I'm sure that'll brighten up their day.

A lot more firings to come, they fired thousands of gaming division workers when Azure missed its targets, let's hope that Ai bubble doesn't burst.

[MrNinosan]

Can you show us any number of profits for the Xbox Department?
No you can't, because they never showed positive profit yet.

[dveio]

This is bad.

I mean:

• D1 GP releases
• Call of Duty as one of the top 3 IPs ever still full-price on PS
• Indiana Jones, Flight Sim, Stalker 2
• Black Friday & Christmas season
• 17% price hike for GPU

Yet their overall gaming revenue dropped -7% in Q2, hardware dropped -29%, and they've put in some incomprehensible minor +2% somewhere inbetween the woods of "content" you can't see through anyway.

Still missing:

• Overall gaming revenue from January to December
• ABK's share
• GP subscriptions

I wonder if we'll ever get these.

I'm sorry, but I'm giggling.

[Knushwood Butt]

While I don't have an MBA, is it just me or are Microsoft's goals working against each other?

They have a goal of 100 million GP subscribers by 2030, but they also want to increase revenue by selling their games on rival platforms (that many don't have GP).

So if their latest game is available to buy on the Nintendo store, for example, and Nintendo does not support GP, how on earth are they going to grow GP subscribers, and why on earth would the Nintendo owner consider buying an xbox when the latest game is already available to them via the Nintendo store?

[spoonard]

100 million GP subs is only remotely possible if they get GP onto PlayStation. And PlayStation won't allow it unless MS drops Xbox hardware. That's why Ubi, and EA are allowed their services, because they don't compete with Sony's hardware.

[Knushwood Butt]

Yeah, and I don't know how well the GP on phones thing will work out because most of the software isn't created with phones in mind.
Streaming to a TV? OK but that's not an easy sell right now.

[Redemption-64]

I am honestly surprised by the revenue decline and the fact the GP grew by such a small percentage. With COD going to GP, I was expecting a decent increase

[TheColbertinator]

This year things will be different.

[OlderGamer17]

Here and go again "But but wait till next year" its time to change the tune Xboxfans🤗

[dveio]

2025: 0 Xbox consoles sold.

MS: We forecast further Xbox console declines for 2026.

[gold_drake]

"we're doing better than ever"
-somewhere the ms ceo

[Jigga69]

That's a real Third Party transition.

[mudakoshaka]

Ouch. Microsoft will try to release Game Pass on trains and public toilets to recoup all the losses.

[blackblades]

Wasn't they warned about GP? They didn't listen at all. They can put it on every thing in the world it wouldn't be what they want but it always a possibility though.

[mudakoshaka]

Well, that’s what you get when you are going all purple. They could not even keep a manly title, CoD, for men. They hade to dip all their franchises in the rainbow bucket. All the indy crap they are releasing on Game Pass is just ridiculous and childish and too much DEI everywhere. This is the pushback from gamers. They thought that consumers will eat any shi* they feed them…that’s not the case.

[anast]

I thought the PC crowd was the holy grail of sales...

[ironmonkey]

Haha what a disaster.

[andy85]

It's sad to see really. I don't want to see Xbox go out of the console business. Sony needs competition. Without that you take stuff for granted and don't try. But even after spending all those billions to get games on the service GP subs still aren't rising and console sales somehow falling. That's obviously what's going to happen soon enough.

[Agent75]

Xbox died after the Xbox 360. Windows died after Windows XP. Microsoft Explorer was swallowed up by Google Chrome, which was then swallowed up Microsoft Edge. Microsoft Bing isn't as good as Google. Forget about releasing a handled and a new Xbox. go multi format to save us from more pain.

[Kimchi357]

Windows died? Which OS are people using nowadays?

[RhinoGamer88]

Yet Phil and his fail team keep their jobs. Awarded with bonuses, stock options, salary increases that make them multimillionaires. #failup

[YourMommySpoils]

There's a hole in the bucket, dear Liza, dear Liza. That's the tune I think, whenever I think of Microsoft gaming.