- Microsoft CFO says Xbox gaming revenue declined because of its first-party portfolio.
- Revenue fell by 9% in FY26 Q2, with Black Ops 7’s poor performance contributing to the decline.
- Xbox’s upcoming robust portfolio is expected to improve the gaming revenue in future reports.
Microsoft’s Q2 earnings have painted a dire picture for the Xbox brand, with its gaming revenue taking a massive hit during Q2 of FY26. The publisher’s performance also lacked in hardware sales despite Microsoft’s billion-dollar investments in the gaming brand.
The publisher’s gaming revenue declined by a staggering 9% in Q2. Microsoft’s CFO addressed this sore statistic, saying that the revenue was below the tech giant’s expectations, driven by the poor performance of first-party games.
Why it matters: Xbox’s gaming revenue also suffered a noticeable impact from Call of Duty: Black Ops 7’s poor performance. The other first-party releases, like Outer Worlds 2, also failed to improve the brand’s quarterly revenue.
During the webcast, Microsoft’s CFO Amy Hood touched on Xbox’s gaming performance. She implied that the first-party content impact across the platform was quite lacking, leading to lower player engagement that further dragged the numbers down.
[Gaming revenue was] Below expectations, driven by first-party content with impact across the platform.-Amy Hood, Microsoft Chief Financial Officer.
Only 4 Xbox first-party games came out during Q2, with Ninja Gaiden 4 and Black Ops 7 being the biggest ones. The brand’s money-making FPS did not perform as well as expected amid strong competition and a community exhausted of the ‘same old’ formula.
Regardless, Xbox’s gaming revenue is expected to improve significantly in the next few quarters with upcoming games like Forza Horizon 6, Fable, Gears of War: E-Day, State of Decay 3, the Halo remake, and more.
Xbox also suffered in other departments; the content and service fell by 5% in the report, showing that even Game Pass declined, likely due to price hikes. It also saw a staggering hardware sales drop of 32%, with Xbox Series sales falling flat last year.
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Shameer Sarfaraz has previously worked for eXputer as a Senior News Writer for several years. Now with Tech4Gamers, he loves to devoutly keep up with the latest gaming and entertainment industries. He has a Bachelor’s Degree in Computer Science and years of experience reporting on games. Besides his passion for breaking news stories, Shahmeer loves spending his leisure time farming away in Stardew Valley. VGC, IGN, GameSpot, Game Rant, TheGamer, GamingBolt, The Verge, NME, Metro, Dot Esports, GameByte, Kotaku Australia, PC Gamer, and more have cited his articles.
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