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- Xbox’s latest financial report highlights a huge $113 million year-on-year revenue decline.
- Hardware sales fell by 29%, while Xbox content services saw slight growth.
- Despite the decline in hardware sales, Xbox is still planning to release its next-gen hardware.
Once a massive empire, Xbox has now somewhat fallen from grace. The console sales are at their lowest, and even some recent great titles haven’t been much of a redemption either. The company’s latest financial report reflects this.
In its latest financial report, Microsoft reported a $113 million decline in revenue. There has also been a 29% decline in hardware sales. However, Xbox content and other services saw a slight increase.
Why it matters: This aligns with Microsoft’s decision to go full-blown publisher, as the hardware isn’t selling well but its software is doing better, leading to a slight increase in revenue.
In its FY2026 Q1 report, Microsoft reported $5.508 billion in revenue, down from $5.621 billion in FY2025 Q1, a $113 million decline. Total revenue fell by around 2%, which isn’t that much compared to hardware.
Microsoft reports a 1% increase in Xbox content and services, driven by Game Pass and third-party content. So, primarily, the growth occurred away from any hardware, emphasizing the need for a multiplatform strategy.
Despite all this, Xbox isn’t shying away from hardware for the next-gen. Instead, it is now almost confirmed that the next Xbox will be a PC-console hybrid costing over $1000. So, how fans react to it will be seen later.
However, based on the current results, Xbox isn’t doing that badly as it may seem. The software is doing fine, but the hardware is costing them big time. With its major games now on PS5, the software revenue could grow further.
What are your thoughts on Xbox revenue and hardware sales falling? Let us know your opinions in the comments or join the discussion at the official Tech4Gamers Forum.
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News Reporter
Abdullah is an avid gamer who primarily plays single-player titles. If you can’t find him anywhere, he’ll probably be at his desk playing The Witcher 3 for the millionth time. When he isn’t playing games, he’s either reading or writing about them.
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