Computing giant attributes 29% drop to fewer console sales

Xbox revenues fall by $1bn

Microsoft has reported a 29 per cent drop in Xbox revenues in the last three months of 2012.

Its Entertainment and Devices Division, the department which houses Xbox, had 11 per cent lower revenues of $3.77 billion compared to $4.24 billion in the same quarter last year, though operating income was $596 million in comparison to $517 million last year.

The main issue for the division was the large drop in Xbox revenue.

“Xbox 360 platform revenue decreased $1.1 billion or 29 per cent, due mainly to lower volumes of consoles sold and lower video game revenue, offset in part by higher Xbox Live revenue,” Microsoft’s statement in its quarterly report read.

“We shipped 5.9 million Xbox 360 consoles during the second quarter of fiscal year 2013, compared with 8.2 million Xbox 360 consoles during the second quarter of fiscal year 2012. Video game revenue decreased, primarily due to $380 million of revenue deferred associated with the Video Game Deferral.”

Regarding the rise in EDD revenue, Microsoft said: “EDD operating income increased, due mainly to lower cost of revenue and sales and marketing expenses, offset in part by decreased revenue and increased research and development expenses.”

In the same report, the tech giant posted total revenue of $21.46 billion with net income of $6.38 billion. Revenue was three per cent higher than in the same quarter in 2011, but earnings were down three per cent.

Elsewhere, Microsoft reduced its marketing spending on Xbox by $92 million (21 per cent).

However, it increased its research and development expenses by $98 million (25 per cent), due to higher staff-related expenses. Something that may be a sign that the console maker is gearing up for the next generation.

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