Microsoft's Xbox Gaming Revenues Fell 11% Last Quarter

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Microsoft on Wednesday announced its financial results for the quarter ended December 31, 2019, revealing higher revenues and operating income as compared to the corresponding period of the previous fiscal year. According to the company, its revenues were up 14 percent, hitting $36.9 billion, while operating income came in 35 percent higher, at $13.9 billion. Net income was up almost 40 percent, coming in at $11.6 billion.

As with recent quarters, Azure remained the single biggest growth engine, with the company reporting a massive 62 percent jump in revenues over last year. Overall cloud services revenue also followed a steady growth trajectory, with the company’s so-called ‘Intelligent Cloud’ services reporting revenues of $11.9 billion, a spike of 27 percent. Revenues from Surface devices and Bing also increased 6 percent each, while Windows and Office products also registered double digit growth.

The major disappointment was in the gaming department, with the company reporting a sharp 11 percent decrease in Xbox content and services revenue. While some of the declining sales, no doubt, can be attributed to the next-gen Xbox consoles that are expected to be launched this year, it would still be a cause for concern for Microsoft, given that it has spend so much resources on competing against Sony and its PlayStation eco-system over the past few years.

Unfortunately for Microsoft, things will only get worse on that front before getting better, with the company’s CFO, Amy Hood, claiming that gaming revenues during the current quarter will also decline by ‘low double digits’, partly because of ‘lower transaction volume on a third-party title’. It will be interesting to see if Microsoft’s efforts at establishing its Xbox Game Pass will pay off in the coming months, possibly offsetting some of the declining revenues from Xbox sales.

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