For its third fiscal quarter ending 3/31/23, Microsoft reported that Xbox Hardware revenue was down 30% year over year. Xbox content and services were up 3%. Overall game revenue was down 4% to $3.6 billion.
Analysis
The big news this week has been the U.K. blocking Microsoft’s acquisition of Activision Blizzard. The recently released financials serve to highlight how badly Microsoft needs the merger to go through if it wants to have a chance of competing long-term in the video game business.
With Game Pass, Xbox content and services have remained stable in recent quarters. However, Microsoft really needs to drive hardware sales if it wants to see growth on the software and services side. The hardware decline was beyond dismal considering supply issues are being resolved.
Later this week, Sony will release its financials. It is expected that the numbers will set records for first-quarter hardware sales. Meanwhile, Xbox hardware had its worst quarter since the Xbox Series X/S launch.
The recent DFC Intelligence video game forecasts have Sony PlayStation 5 outselling Xbox Series X/S by a wide margin in 2023. However, with these latest numbers, the forecasts may need to be adjusted even more in Sony’s favor.
