Xbox has reported its best financial year on record, with a 32.8% increase bringing in $15.37 Billion in revenue. According to industry analysis Daniel Ahmad, most of this success comes from the $2.3bn increase in software and subscription revenue, with the company going all-in on Game Pass since the launch of the Xbox Series X/S.
While software is the big winner here, the hardware wasn't lacking either. Hardware revenue has almost doubled since the launch of the Series X/S, and boosted hardware revenue 92% year on year.
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Ahmad highlights that this record-breaking revenue is a result of the pandemic, as this lead to an uptick in software sales and Game Pass subscriptions. However, throughout 2021 Microsoft has also been investing heavily in Game Pass, which now boasts over 300 titles. It's possible that the company's acquisition of Bethesda has also played a part in the success, with the highly anticipated Starfield confirmed to be an Xbox and PC exclusive.
In the numbers, you can see Microsoft and Sony's different strategies in action. The PS5 has shifted over 10 million units, whereas the Xbox Series X/S lags behind with an estimated 6.5 million. Despite this, it was still the best year on record for Microsoft, suggesting its focus on making money elsewhere is paying off.
Putting the console wars aside for a second, it's actually been a great year for all three major companies. Both Sony and Nintendo also reported record-breaking revenue earlier this year, earning $25.03 billion and $16.59 billion respectively. It's worth mentioning that Nintendo pulled this off without a new console release, unlike its two competitors.
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