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

Giuseppe Nelvaby Giuseppe Nelva
January 29, 2025
in News
Reading Time: 2 mins read
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Today Microsoft announced its financial results for Q2 of fiscal year 2025, related to the period between October and December 2024, including an update on its gaming business.

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It’s worth mentioning before we dive into the results, that for the past four quarters, we saw big differential growth percentages from Microsoft, as figures after the acquisition of Activision, Blizzard, and King were compared to figures before the acquisition.

This is the first time following the acquisition that we get an apples-to-apples comparison, as Q2 of the previous fiscal year also included revenue from the acquired companies.

According to the financial documents related to the More Personal Computing Business, which includes the gaming business, and the form 10Q, overall gaming revenue was $6,581 million and declined 7%, year-on-year (from $7,111 million),

Xbox content and services revenue increased 2% year-on-year driven by growth in Xbox Game Pass. Yet, that was not enough to compensate for a massive drop in hardware revenue, which dropped a whopping 29% year-on-year due to lower volume of consoles sold.

This is actually pretty much precisely in line with Microsoft’s guidance expressed by Chief Financial Officer Amy Hood in October. She mentioned that gaming revenue was expected to decline in the high single-digits (between 5% and 9%) due to the Xbox hardware business, while content and Services revenue was expected to be relatively flat.

While (as usual) Microsoft did not share data on operating income for its gaming business specifically, we hear that the gross margin for the More Personal Computing Business (which includes gaming, as mentioned above) increased by 13% “driven by growth in Gaming.”

We can also take a look at the performance of Microsoft as a whole, with revenue up 12% year-on-year and operating income up 17% year-on-year.

If you’re interested in comparing today’s results with historical data, you can check out our article about the previous quarter’s financial results, announced in October.

Other companies have also already announced their financials this quarter, including Koei Tecmo and Capcom.

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