Microsoft has released its earning results for FY23 Q4 and Xbox's gaming revenue is up by 1% year-over-year.
Following similar trends of FY23 Q3, Xbox's content and revenue services in this latest quarter grew by 5% - once again driven by the growth of the Xbox Game Pass service and third-party content.
Xbox hardware revenue has taken a hit, with a decline of 13%. Fortunately, it's not even half the previous quarter's decline (30%) with Microsoft at the time citing supply issues.
Overall, this is a much better quarter for Microsoft's gaming division than the previous one, which revealed in April of 2023 how revenue was down by 4% year-over-year.
In a conference call, Microsoft's CEO Satya Nadella also referenced how the company was anticipating Bethesda's upcoming release Starfield - due out in September, and noted how Xbox Game Pass usage in this latest quarter was up by 22% year-over-year.
For this same period, Microsoft has banked a whopping $56.2 billion in revenue, up 8% year-over-year.
It could get even better for Microsoft with the tech giant's acquisition of Activision Blizzard close to being finalised. It has already resulted in players flocking to older Call of Duty titles on Xbox in recent weeks.
What are your thoughts about these Q4 results? Tell us in the comments.
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[source microsoft.com, via windowscentral.com]
Comments 39
Surprised at seeing any growth given the only “big” game released so far has been RedFall.
Next earning report will be very interesting, post the release of Starfield.
This is exactly why the ABK acquisition is so important to Microsoft.
It knows it won't overtake PlayStation in hardware, so it needs to up Xbox revenue somehow to offset hardware losses.
@Tharsman They did release HiFi Rush and Minecraft Legends.
@AverageGamer different quarter, but continuos sales of those across multiple platforms (pc, switch, and PS for Minecraft) likely contributed to that 1% growth. Being off-quarter means they didn’t add that many sales, though.
@Total_Weirdo I saw Xbox advert the other day on Netflix and that was the first one I had seen in years. I have the cheap Netflix plan that has commercials.
@Tharsman and forza ...
@BleedingDreamer microsoft are the ones that power the advertising
https://about.ads.microsoft.com/en-gb/blog/post/october-2022/how-microsoft-will-power-netflix-new-ad-supported-tier
@GamingFan4Lyf
poeple seem to not notice this....but MS is after publishers that has games that consume lot of time...zenimax=fallout 76+elder scroll online+ fallout SP and starfield and elder scroll and other RPGs with +200h of gameplay and infinite mods .....ABK is of course a multiplayer leader....the plan is to keep everyone subscribed forever thats the main reason for all of this not king or mobile like they say ABK will provide them a huge GP boost
@Tharsman The concern will be that hardware revenue has fallen for the second straight year (13% FY23, 11% FY22) since supply was no longer constrained.
Whereas the competition, who also haven't released a top AAA first party game yet this year, still jumped up 81% & 287% respectively. (The 287% was due to coming out of supply constraint YoY, so take with a heavy pinch of salt, but still exceeded all expectations)
As much as 'Xbox' is bigger than just console now, and they are pushing Game Pass PC heavily, this will be disappointing for Microsoft, they are losing ground on console. Will be interesting to see if/how Starfield changes that at all.
@themightyant the strange part is that is not like that. Around me it was easier to find Series X in 2021 than in the last 12 months. And Phill Spencer mentioned they were trying to fix that during June's Microsoft showcase so it should be fairly common across most markets (maybe apart from US)
@Balta666 To be honest I haven't been following global stock too closely. I assumed as stock was fine basically a year ago it would still be fine now. Certainly here in the UK generally there don't seem to be any major issues, I just checked online both consoles available at major retailers mostly unbundled, and even Series X can be found in some retail stores. May be different elsewhere.
Regardless of the reason MS will still be disappointed in a second year of hardware decline whether this this is due to a supply issue, a demand issue, or both. Especially when the competition is setting new hardware sales records YoY, the gap is widening.
Hardware Revenue is always going to be a 'difficult' one with Consoles being sold at a 'Loss' and its all the peripherals - extra controllers, headsets, money from 'licensed' 3rd Party accessories like Expansion Cards etc, that help offset the losses.
Sony for example have Face Plates on their Console - another way to offset their losses on every unit sold. The more 'Consoles' you sell, the more 'peripherals' you'll sell, more face-plates etc...
The fact that I don't 'need' to buy a Series S/X console to be part of the Xbox Ecosystem, play Xbox games day/date etc isn't helping. If you have a decent Gaming PC set-up, you don't need a Series console at all but maybe opt to buy PS5 to play Only on Playstation games. There is 'no' ONLY on Xbox games - thanks to PC's and even Cloud now...
I had mentioned the supply issues with series x previously, but a few people didn't believe me for some reason, even though the evidence was obvious the whole time.
It was not surprising at all that they mentioned the issue themselves at their E3 presentation.
They need to do better
@themightyant they should be disappointed no argue on that but it may well be that is on them as well as some lack of demand for the product.
@BAMozzy Sony isn’t selling the consoles at a loss. They’ve been making money on them for at least a year now if I recall correctly.
Of course their gaming revenue is up. They're the leaders.
@FatalBubbles Sony is broke. That's why Microsoft purchased Activision and Sony didn't.
@TakeItEasy Yes, exactly what you said. This is why Microsoft's priority is subscribers, not console sales.
@themightyant as @Balta666 stated, it’s been hard to get your hands on Xbox series x in the US for the last 12 months. It did seem to improve after the showcase. The UK (nor EU) has never been a strong market for Xbox, American countries always been a lot more friendly towards Xbox, though. So, in the west, it’s been a lot more supply constrained.
I do expect Starfield, Forza, ABK games in GP, all of that should boost the games going forward, but I doubt MS cares to try catch up with PS on console sales. So long they have a healthy gaming business, they don’t mind it being split between console and PC users.
FatalBubbles wrote:
That's not necessarily true, but an easy mistake to make, as it seems we were misled a little.
Sony CFO Hiroki Totoki claimed to investors it was "no longer selling (PS5) at a loss" all the way back in Aug 2021, but it wasn't clear EXACTLY what figures he was referring to.
Jim Ryan's investor briefing shed a little more light on this and the graph he used (page 10) was
BOM (bill of materials)COGS (cost of goods sold) vs average wholesale cost. (edit: COGS not BOM)In other words the cost of raw materials & manufacture were for the first time going to be less than the cost they sell PS5 at wholesale.
The trouble is there are a LOT of other costs associated with PS5 whether that be Research and Development, Marketing, Distribution etc. Based on the information we DO have it's not certain Sony are making a profit on each console when ALL costs are considered, only some of them.
Devil's in the details, and they told investors what they wanted to hear.
If I had to make an educated guess i'd assume that when ALL costs are factored in it's unlikely PS5 is selling for a profit, which is fine, it's a loss leader and they make their money elsewhere, just like Xbox.
These numbers are nothing short of absolutely pathetic. I know investors are probably thinking this entire division isn't worth the effort. So far - after multiple decades now - it simply isnot.
@TakeItEasy The only flaw in that logic is that it's cheaper to buy the game outright and play it over long periods of time than it is to keep holding a GP subscription.
I mean, most people hopefully use GP to play multiple games (as intended) but subscribing for one game (like CoD multiplayer/Elder Scrolls Online/etc.) doesn't make sense.
I do suspect a lot of people will subscribe for Starfield, binge the crap out of it for a month or two, and then cancel once they've "had their fill". The hardcore fans who want to live in the game for the next few years will be better off buying it.
@Cashews How are they pathetic?
@Lightning720 1% when you have next to zero market share? Hardware DOWN of all things after three years of nothing?
In what way is this a positive? How can you put any positive spin on this? There is nothing, and I mean that quite literally, nothing positive in this.
It is making Microsoft's entire brand look bad. It is a drag on the company from a branding, profitability and an allocation of resources perspective. Frankly, I don't understand why they keep it afloat. I understand even less why they'd deplete their cash reserve by a whopping 60% for a company so many people loathe. ABK is still getting terrible press - which for some reason Purexbox is avoiding.
@Cashews utter nonsense. Windows is down much more than Xbox. Does that mean Microsoft should ditch Windows as it makes their figures look bad, and is therefore a drag on branding, profitability, and an allocation of resources?
People loathe plenty of companies. Apple, Google, Meta, Sony PS, yet they still make a lot of money. Companies don't shut down their products because some people loathe them.
Any deal tends to get bad press. ABK is no different. That doesn't mean Xbox shouldn't push ahead with it, especially when the average consumer won't know about the deal or care.
Thank you for confirming what I had already suspected - you don't really understand business, but don't worry, most people online don't yet still feel happy to share their "expertise".
@GamingFan4Lyf I agree they need to increase revenue, but how can a $69 billion payment offset any increased revenue. Would take decades surely?
@Angelus3K It's called "playing the long game".
Plus, I think Microsoft is setting itself up to become a major third-party publisher rather than a full-on platform holder (at least, not in the traditional sense).
I think Microsoft will try one more traditional console, but if it continues to be a loss, Microsoft will figure out a way to provide TV gaming - but without all the extra R&D required for a traditional console. Also, Microsoft will make all future games available on all platforms.
I think Microsoft will still make gaming hardware and call it an Xbox, but I don't see it being a custom hardware machine anymore like we have been seeing. I see Microsoft just selling gaming PC's for the TV: using commercial Intel/AMD CPU and Nvidia/AMD GPU.
I don't think Microsoft will go full-on streaming only.
Yea that’s a good point. I think it would be a great move for them to go completely multi platform.
@Romans12 I can’t tell if this is sarcasm or not? MS bought them to get back into the game.
@themightyant I understand what you’re going after but aren’t they simply just saying it costs them less to make it than it does to sell it?
I would likely agree that all the R&D and marketing are not being considered as they aren’t COGS. Distribution might be, unsure on that one.
@FatalBubbles Yes that is what they are saying. The cost of making the device is less than they sell it for. But as I said it's deceptive, the full cost of releasing a product isn't just parts and assembly. If they are only just turning a profit on that calculation, they will still be making a loss per unit overall. Distribution (as well as marketing, R&D, outside factory staff etc) and other indirect costs are never part of COGS.
I think Hiroki made the statement because there had been traction of some rumours that Sony were taking a massive loss on each PS5 (rumours were BOM was as high as $500 - $600). Which as they sell at wholesale prices, not retail ones, was a massive discrepancy. He was just reassuring investors.
I firmly believe every Xbox SX and PlayStation 5 are sold at a loss. In fact Xbox swore under oath in the Epic v Apple trial that they have never made a profit on ANY Xbox console ever. They were likely factoring in ALL costs.
TLDR: We can make numbers say what we want, devil is in the details.
@FatalBubbles GP is nearing 50 million subscribers, PS Plus isn't. Microsoft has trillions, Sony doesn't. Microsoft wins. No debate.
@Romans12 50M???? I would love to see evidence of that. The last reporter number was around 29M in February 2023. There is zero chance it doubled since then. As of May 2023, PS+ was 47.4M subs.
It appears that you have the numbers completely backwards.
No great surprises here at all and Microsoft can offset the losses due to the size of the corporation. They will stop making consoles in the next 10 years and Xbox will become cloud and streaming only. That’s where there focus is.
@FatalBubbles They didn't have close to 50 million Game Pass subscribers (edit) . @Romans12 keeps stating this inflated figure, with no evidence, not sure why. Even Phil Spencer has stated that the market for subs has stagnated on Xbox for now.
It's around 30 million give or take. They will be hoping Starfield gives them a bump, whether those users stay subbed is another story.
HOWEVER since they are rebranding Xbox Live Gold - which has an estimated 50ish million subscribers, including GP Ult - into Game Pass Core they will now have over 50 million "Game Pass" subscribers, even if a large bulk of that don't actually have access to the main part of Game Pass, the library and Day 1 releases.
As well as getting rid of GwG, something they have wanted to do for years (they tried a few years ago through an insane price hike to phase it out, before walking that back) they have now likely doubled their "Game Pass" subscriber count overnight. Smart business. Microsoft might even publish numbers for once.
@Sifi I don't understand what your point is.
GwG WAS the equivalent to PS+ (now Essential), they were almost identical offerings on paper, online + a handful of games per month, so why not compare them?
The GwG games were mostly rubbish in recent years, right? Almost everyone complained about them, has nothing to do with fanboys.
And this rebrand WILL approximately double their game pass subscriber count, that's a fact. It's smart business, as I said.
What is your point?
@Sifi Yes. What is your point?
I think my IQ halved just reading some of the replies in here.
These figures are not great, and given that MS has been saying all year that they have lost the race and are a distant third place, anyone suggesting they are a victorious mighty empire in the gaming space must be on crack. The very reason they have bought ABK is because they don't believe they can compete without doing so.
Anyone who actually cares about games and has an xbox should be happy as despite the continued failure to capture more of the market, such a huge investment shows they are still in the game, and competing harder than ever to turn this around.
The result is better services offerings and games coming to those of us who have invested in their ecosystem and that's all I care about. Anyone who is more interested in corporate profits or bragging rights for kiddie console wars simply isn't a games player and is therefore simple to ignore.
@GamingFan4Lyf
Starfield is 80$ that alrady 1 year of gamepass ultimate
Not everyone is ready to buy a single game with that price to see if they like it (européan poeple forget that south america asia africa has 80% of world population and are not being paid dollars and euros)
Most of poeple pays for GP thinking they will play 100 games but they got jobs and studies and end up trying games but only playing 5 or 6 the hole year...which still beneficial but not as much as planned but poeple still do it....you assume consumers are thinking wisely and are perfect...no they arent and companies knows that so they use it.
A simple equation...give poeple games that can be played for hundreds of hour and they will stay subscribed
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