Overview
- For the quarter ended December 31, 2025, Xbox content and services revenue fell 5% year over year and was described as below expectations by CFO Amy Hood.
- Xbox hardware revenue declined 32% on lower console volumes, and the company expects hardware to fall year over year again in Q3.
- Guidance calls for mid‑single‑digit declines in content and services next quarter, with growth in Game Pass expected to partially offset the drop.
- CEO Satya Nadella pointed to record PC players and paid streaming hours on Xbox, while Microsoft did not disclose Game Pass subscriber numbers.
- Microsoft’s overall revenue rose about 17% on cloud strength, as industry reporting links Xbox softness to 2025 price hikes, studio layoffs and cancellations, and a services‑first shift toward PC and cloud.