Xbox revenue up 13% thanks to Starfield… but hardware sales have dropped

Starfield has bolstered Xbox sales and Game Pass numbers, but it doesn’t seem to have convinced anyone to buy an Xbox.

Just yesterday, Microsoft shared the results of its 2023 fiscal year, revealing that it had missed its growth target for Xbox content and revenue, as well as implied that the same has happened with Xbox Game Pass for the third year in a row.

However, the company as a whole is hardly in dire straits, especially according to the results of its first quarter of the 2024 fiscal year, which covers July to September. It made $56.5 billion (about £46.6 billion) in revenue across the whole company, which is a 13% increase over last year.

But what about the gaming division, specifically? Well, depending on what you focus on, things are looking positive on that front too, with Xbox revenue also up 13% thanks to ‘better-than-expected subscriber growth in Xbox Game Pass as well as first party content.’

This is primarily thanks to Starfield, since that was the only major exclusive Xbox had during that quarter and proved to be a sales success in the US.

Microsoft CEO Satya Nadella adds that Starfield’s launch set a new record for the most Xbox Game Pass subscriptions in a single day. Given the service’s struggles, this is welcome news for Microsoft, although they didn’t provide any actual subscription numbers.

While this all sounds very positive, Microsoft also notes that hardware sales declined by 7%, i.e. less people bought an Xbox this year than last year. This is interesting since Xbox sales did significantly improve here in the UK thanks to Starfield… although still not enough to outsell the PlayStation 5.

This data suggests Starfield’s exclusivity didn’t convince enough people to invest in an Xbox, with few people seeming to consider the game a killer app and worth buying new hardware for.

It’ll be interesting to see what sort of impact the acquisition of Activision Blizzard (which went through less than two weeks ago) will have on Microsoft’s future financial results.

In an earnings call, chief financial officer Amy Hood says they expect Xbox content and revenue services growth in the mid to high 50s [i.e. a 50% increase – or at least that’s what they seem to be implying] by the end of the next quarter, thanks to Activision Blizzard.

If that doesn’t happen, then Microsoft’s $69 billion purchase of the company may not result in the quick reversal of fortunes that Microsoft was hoping for.

Original Article