Xbox Predicts Another Drop In Console Hardware Revenue Next Quarter

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Expecting Poor Hardware Revenue From Xbox Again!

Story Highlight
  • Xbox hardware revenue declined by 31% year-on-year in Q3 FY2024.
  • Microsoft expects similar results in Q4 FY2024, with hardware revenue going down again.
  • Overall gaming revenue should continue rising due to Activision Blizzard’s contributions.

Xbox games are selling better than before, and Microsoft is doing much better in the gaming industry after the recent acquisition of Activision Blizzard. Microsoft has confirmed these results via its Q3 FY2024 financial earnings results.

However, the company’s gaming hardware department was a weak point. Revenue declined by 31% this quarter, and Xbox is set to repeat this pattern in Q4, according to Microsoft.

Why it matters: Xbox is already in last place regarding console hardware, and these results could push it further below the competition.

Microsoft Xbox
Microsoft May Attempt A Next-Gen Console Earlier Than Usual To Solve The Problem

Microsoft’s Q3 results point to a grim fate for Xbox hardware. The gaming giant attributed this decline to a lower volume of consoles sold despite major console exclusives like Palworld earlier this year.

CFO Amy Hood said they expect hardware revenue to decline again next quarter. Similarly, Microsoft’s Surface department is looking at lower revenue figures from hardware in Q4 of FY2024.

Fortunately for Xbox, the overall gaming division will continue to exhibit growth. Thanks to Activision Blizzard, the CFO predicted another 40-50% uplift in revenue.

Xbox Game Pass
Xbox Game Pass Is No Longer Beneficial As A Console Seller

Elsewhere, Microsoft CEO Satya Nadella confirmed his commitment to releasing more games across various platforms. He also acknowledged the large number of Xbox best-sellers on PlayStation recently.

While Game Pass stood at 34 million users until recently, Satya Nadella further stated that the service has now crossed 35 million subscribers.

It should be noted that these results wouldn’t have been possible without Activision Blizzard since the publisher became the largest source of revenue.

However, console sales are still rapidly declining. At this rate, the Xbox Series S|X might end up selling fewer units than the Xbox One, which is often considered Microsoft’s worst generation to date.

If leaks are to be believed, the gaming giant plans to launch its next console earlier than the competition to tackle the problem, but it remains to be seen if this will solve Xbox’s biggest problems.

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