Gaming revenue down 10%, with a 48% drop in hardware sales, as Xbox enters a transitional period for console business

Microsoft’s hardware revenue has dropped 48 per cent year-on-year (YoY) for its fourth fiscal quarter, but 65 million monthly active users subscribing to its Xbox Live services – a boost of 14 per cent YoY as it jumps from 57 to 65 million – which in part offset the fall.

It seems likely the hardware decline comes as players hold back from purchasing an Xbox One following the announcement of the company’s next-gen system, codenamed Project Scarlett, at E3 2019, which is expected to release at the end of 2020.

Gaming revenue as a whole and Xbox software and services were down 10 and 3 per cent respectively (though only 8 per cent and one per cent when currency variations were factored in). The overall category Xbox sits within, however, entitled More Personal Computing, was up 4 per cent YoY, jumping to $11.3bn.

Beyond its gaming vertical, however, the company reports its Q4 revenue is up 12 per cent YoY – hitting $33.7bn – whilst operating income and net income are both up by 20 per cent and 49 per cent, rising to $12.4bn and $13.2bn respectively.

This means that, for the full financial year, Microsoft reported revenue of $126bn – that’s a rise of 14 per cent year-over-year – and net income of $39.2bn, which is up a staggering 137 per cent on last year. The operating income for the year was also up – this time by 23 per cent – and comes in at $43bn.

“It was a record fiscal year for Microsoft, a result of our deep partnerships with leading companies in every industry,” said Satya Nadella, chief executive officer of Microsoft. “Every day we work alongside our customers to help them build their own digital capability – innovating with them, creating new businesses with them, and earning their trust. This commitment to our customers’ success is resulting in larger, multi-year commercial cloud agreements and growing momentum across every layer of our technology stack.”

“Q4 commercial cloud revenue increased 39 per cent year-over-year to $11.0 billion, driving our strongest commercial quarter ever,” added Amy Hood, executive vice president and chief financial officer of Microsoft.

About Vikki Blake

It took 15 years of civil service monotony for Vikki to crack and switch to writing about games. She has since become an experienced reporter and critic working with a number of specialist and mainstream outlets in both the UK and beyond, including Eurogamer, GamesRadar+, IGN, MTV, and Variety.

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