Microsoft Reports Drop In Xbox Sales, Overall Gaming Revenue

Microsoft has released its latest earnings report for the quarter ending December 31, less than a week after it announced it would be laying off 10,000 people. The tech giant reported an overall drop in income, as well as a 13% decrease in gaming revenue.

Both hardware and content sales lagged for Xbox compared to the same period the previous year, with console revenue down 13% and content and services down 12%. Microsoft points out that this comparison is with a “strong prior year,” pointing to “declines in first-party content and lower monetization in third-party content” for the drop. This was partially offset by Xbox Game Pass’s continued growth, Microsoft adds.

Microsoft’s latest consoles, the Xbox Series X and Series S released in 2020 with demand initially outstripping demand. In the most recent financial quarter, revenue from console sales dropped 13%, with Microsoft pointing to lower pricing over the holiday period, as well as an overall drop in the number of consoles sold.

The report comes after a major round of layoffs involving 10,000 staff across Microsoft’s various divisions, and makes note of $800 million in severance costs relating to this action. Combined with other costs related to the downsizing, the layoffs cost Microsoft an estimated $1.2 billion.

Microsoft is still looking to acquire gaming company Activision-Blizzard in a deal worth $68.7 billion, despite facing regulatory hurdles and antitrust concerns.