Xbox division turnover drops due to delivery problems and reduced monetization
Microsoft posted more sales and profits in the past second quarter, but the figures for Xbox hardware and services declined. This is partly explained by delivery problems and a drop in monetization for all games.
Overall games revenue was down seven percent from the same period a year ago, or a drop of $259 million. According to Microsoft is attributable to a reduction in Xbox content and services, but also to a decline in Xbox hardware sales.
Xbox content and services revenue fell 6 percent. 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 corollary to the fact that the Xbox Series consoles came out about two years ago, making good numbers back then. Delivery problems during this period also still play a role, so the way up has not yet been found. Microsoft says demand is still high.
The disappointing result at the Xbox division could not be fully compensated by the Xbox Game Pass subscribers. There was a growth in turnover and therefore a growth in the number of subscribers, although Microsoft does not provide exact figures about 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: continued production shutdowns in China in May and a “deteriorating market in June” negatively impacted Windows OEM revenue by more than $300 million.
The PC market is currently showing a considerable decline, but sales from Microsoft Surface rose by ten percent. Microsoft did not make any major new introductions of Surface products in the past quarter and believes this increase is mainly due to Surface’s rise on the commercial front.
Microsoft ended the quarter with total revenue of $51.9 billion, up 12 percent from a year ago. Net profit was $16.7 billion, up 2 percent.