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Microsoft's games revenue continues to slip due to falling hardware sales

Microsoft's games revenue continues to slip due to falling hardware sales

January 26, 2017 | By Alex Wawro




Today's the day that Microsoft reports its earnings for the second quarter of its 2017 fiscal year, and while the company's overall finances are up slightly year-over-year, revenue generated by its games business has fallen.

Industry watchers looking to keep tabs on the company should know that Microsoft narrowly topped Wall Street's expectations, and reported $6.17 billion (GAAP) in profits on $24 billion in revenue generated during the three months ending December 31st.

That's a bit better than the $6.02 billion it earned on $23.79 billion in revenue during the same period a year prior. However, revenue from sales of game hardware and software fell 3 percent year-over-year, which Microsoft attributes to "lower Xbox console revenue offset by Xbox software and services revenue growth."

According to a slideshow presentation to investors released today (excerpted below), the lower Xbox console revenue is due to pricing cuts and diminished volume. Microsoft claims its revenue generated from sales of Xbox software and services grew 18 percent year-over-year, while its Xbox Live monthy active user count grew 15 percent to hit 55 million. however, keep in mind that accounts for members across both Windows 10 and mobile platforms, in addition to Xbox consoles.

Microsoft has blamed Xbox console revenue for the slipping earnings of its game division for some time now, suggesting that sales of the Xbox One and Xbox One S are not measuring up, historically speaking, after last year's discontinuation of the Xbox 360.

Of course, the company is expected to launch a new version of its Xbox game console, currently referred to as "Project Scorpio", later this year.



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