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Xbox Hardware Revenue Drops 29% as Microsoft Warns of Further Gaming Declines

Guidance points to another quarterly decline for gaming despite strong company results from cloud and AI.

Overview

  • Overall gaming revenue fell by $113 million, or about 2% year over year, driven primarily by lower console volume.
  • Xbox content and services rose 1% on growth in Game Pass and third‑party titles, partially offset by weaker first‑party releases.
  • CFO Amy Hood said Xbox content and services are expected to decline in the low‑to‑mid single digits next quarter, with hardware revenue also down year over year.
  • Microsoft raised console prices in May and October and lifted Game Pass Ultimate to $29.99 in October, with the impact of these increases not reflected in the reported quarter.
  • Xbox‑branded ROG Ally handhelds launched on October 16 in partnership with ASUS, and their initial sales will appear in the next set of results.