Xbox Hits New User Records, As Microsoft Reports Drop In Xbox Sales And Gaming Revenue

Microsoft has released its latest earnings report for the quarter ending December 31, less than a week after it announced it would be laying off 10,000 people. The tech giant reported an overall drop in income, as well as a 13% decrease in gaming revenue.

Xbox hit a new MAU (monthly active users) record of 120 million for the latest period and Xbox Game Pass continued to grow, but that was the extent of the bright spots for Xbox during the quarter.

Both hardware and content sales lagged for Xbox compared to the same period the previous year, with console revenue down 13% and content and services down 12%. Microsoft points out that this comparison is with a “strong prior year,” pointing to “declines in first-party content and lower monetization in third-party content” for the drop. This was partially offset by Xbox Game Pass’s continued growth, Microsoft adds.

Microsoft’s latest consoles, the Xbox Series X and Series S released in 2020 with demand initially outstripping demand. In the most recent financial quarter, revenue from console sales dropped 13%, with Microsoft pointing to lower pricing over the holiday period, as well as an overall drop in the number of consoles sold.

The report comes after a major round of layoffs involving 10,000 staff across Microsoft’s various divisions, and makes note of $800 million in severance costs relating to this action. Combined with other costs related to the downsizing, the layoffs cost Microsoft an estimated $1.2 billion.

Microsoft is still looking to acquire gaming company Activision Blizzard in a deal worth $68.7 billion, despite facing regulatory hurdles and antitrust concerns.