Xbox is doing well for Microsoft according to the results for the third quarter of its fiscal year running from January to March 31, 2022. Gaming revenues were up 6% year on year to $3.74 billion. Xbox (digital) game sales and services like Game Pass and advertising account for 81% of those revenues.
Although it’s the first time that revenues rose above the $3 billion mark in this particular quarter (first 3 months of the calendar year), Microsoft said it was ‘below expectations’. Same quarter last year, thanks to the well documented positive effect of covid quarantines on game spending and the recent release of Xbox Series X/S, was already a record setting quarter.
Due to continued demand and increased supply for Xbox Series X/S, hardware revenues rose 14%. Partially helped by the PS5 stock shortages that drive buyers interested in current gen consoles to Xbox. That’s why this quarter the Xbox Series X/S was the market leader in the US, Canada, UK and Western Europe. According to Microsoft CEO Satya Nadella it has been now for two quarters in a row.
Microsoft expects gaming revenues to go down due to lower engagement hours year on year thanks to the lift of covid stay-at-home restrictions. Also, because of the latest covid-related shutdowns in China, the production of new Xbox hardware may suffer. Still Game Pass owners played more hours than ever before, up 45%. More than 10 million players have streamed games through the Xbox Cloud gaming service.
To put everything in perspective, Xbox and gaming is part of a segment that is called More Personal Computing. It shares that space with Windows, devices (like Surface) and search and news advertising. Total revenue of this segment rose 11% to $14.5 billion. It’s Microsoft’s smallest segment behind Productivity and Business Processes ($15.8 billion) and Intelligent Cloud ($19.1 billion), making it $49.4 billion for the third quarter. Xbox only accounts for 7.5% of that total.