Xbox 360 platform revenues have decreased by $418 million in the three months ending September 30th compared to last year.
In its latest quarterly report, Microsoft also showed that operating income for its Entertainment and Devices Division - which includes Xbox 360, Skype and Windows Phone - had fallen by 94 per cent, down to $19 million from $340m.
Revenues for the division meanwhile stood at $1.9 billion, down just $15 million from last year.
The console giant shipped 1.7 million Xbox 360 consoles during the first quarter of the 2013 fiscal year, compared to 2.3 million last year.
Microsoft blamed the decrease in revenue on the lower volume of consoles sold as well as lower videogame revenue, although it noted this was partly offset by higher Xbox Live revenue.
The firm also suggested video game revenue had fallen primarily due to the release of Gears of War 3 in the first quarter of the fiscal year in 2012, with no comparable major releases in the first quarter for 2013.
It should also be noted that the firm is likely gearing up for the next-generation of consoles, whilst the Xbox 360 has been out for seven years after being launched in 2005. To date the console has sold nearly 70 million units.
Overall, Microsoft revenue stood at $16 billion for the last quarter, a fall over $1.3 billion on the same time last year. Net income meanwhile stood at $4.4 billion, again down by $1.3 billion from the same quarter the year prior.