Microsoft lauds Fortnite as Xbox revenue soars 36 per cent

Microsoft has released its financial report for the first quarter of fiscal year 2019 (which started in July 2018) and the company is doing well to say the least with revenue across all segments reaching $29.1bn (£22.5bn) – a 19 per cent growth year-on-year.

In the gaming category, Microsoft reported a 44 per cent increase in revenue year-on-year with “Xbox software and services” specifically seeing a 36 per cent growth. The report points at “third-party title strength” as the reason behind this increase on the Xbox side.

In terms of hardware, revenue was up an impressive 94 per cent thanks to very good performance from Xbox bundles, though Microsoft admitted that the same period last year was quite slow as the Xbox One X didn’t launch until Q2 FY18.

Looking into Xbox Live numbers, Microsoft reported 57m active users during Q1 FY19, which is flat compared to Q4 FY2018. It’s slightly under Q2 and Q3 2018, which both recorded 59m users.

In the earnings call transcript, Microsoft CEO Satya Nadella said that the company has continued to expand its reach, with over 2bn players worldwide. He continued, mentioning Microsoft’s recent acquisitions (which we talked about to Aaron Greenberg recently) and Fortnite’s success: “We are investing in content, community and cloud services across every endpoint to expand usage and deepen engagement. First-party content is key to our approach, and we now have eleven game studios in our portfolio to deliver differentiated content for our fast-growing services like Xbox Game Pass. Xbox Live now has 57 million monthly active users, and Mixer user growth is accelerating. This loyal, high value community is our strongest asset, creating expanding opportunity for monetisation of first and third-party games. Fortnite is a good example, and all up we are seeing record software and services revenue and engagement being driven on our platform.”

He then touched upon Microsoft entering game streaming with Project xCloud and how it could benefit developers: “Earlier this month we announced Project xCloud, a breakthrough game-streaming technology that puts gamers at the center of their gaming experience, enabling them to play games in high-fidelity wherever and whenever they want, on any device. And, it will empower game developers to scale to hundreds of millions of new users across devices. It’s early days, but I’m excited about our road map.”

Looking forward, Microsoft expects Q2 FY19 to be slightly under Q2 FY18 but on a par with Q1 FY19: “We expect revenue growth to moderate due to a prior year comparable that included the launch of Xbox One X,” explained CFO Amy Hood. “Software and services growth should be similar to Q1 with continued benefit from a third-party title plus overall platform strength.”

About Marie Dealessandri

Marie Dealessandri is MCV’s former senior staff writer. After testing the waters of the film industry in France and being a radio host and reporter in Canada, she settled for the games industry in London in 2015. She can be found (very) occasionally tweeting @mariedeal, usually on a loop about Baldur’s Gate, Hollow Knight and the Dead Cells soundtrack.

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