Xbox Division Sales Drop on Delivery Issues and Reduced Monetization
Microsoft posted more revenue and profit in the second quarter, but the figures for Xbox hardware and services declined. This is partly explained by delivery problems and a decrease in monetization in all games.
Overall game revenue was down seven percent from the same period a year ago, or a drop of $259 million. According to Microsoft This is due to a decline in Xbox content and services, as well as a decline in Xbox hardware sales.
Xbox content and services revenue fell 6%. Microsoft attributes the latter to fewer hours played and reduced monetization on both its own Xbox titles and games from other publishers.
Xbox hardware sales fell 11 percent. The company says this is partly a logical consequence of the Xbox Series consoles coming out about two years ago, which put in good numbers at the time. Delivery problems during this period also still play a role, as a result of which the way to the top has not yet been found. Microsoft does say that demand is still high.
The disappointing result in the Xbox division could not be fully made up for by Xbox Game Pass subscribers. There was, however, a growth in turnover and thus a growth in the number of subscribers, although Microsoft does not provide exact figures on the current number of subscribers. In January that number was still at 25 million and in January 2021 there were 18 million subscribers.
The PC market didn’t help Microsoft either: ongoing production shutdowns in China in May and a “deteriorating market in June” negatively impacted Windows OEM revenues of more than $300 million.
The PC market is currently experiencing a significant decline, but Microsoft Surface revenue increased by ten percent. Microsoft didn’t make any major new introductions of Surface products in the quarter and believes that this increase is mainly due to Surface’s rise in the commercial space.
Microsoft closed the quarter with total revenue of $51.9 billion, up 12 percent from a year earlier. Net profit came in at $16.7 billion, an increase of two percent.