Name: Even Microsoft’s Best Quarter Couldn’t Save Xbox From Declining Revenue
Uploaded: 2026-07-30T09:10:09+00:00
Description: Microsoft reported a strong fourth quarter, but its Xbox business continued to struggle, with both gaming content and console hardware revenue falling year-over-year. For the quarter ended June 30, Microsoft posted $90 billion in revenue, up 18%, while net income jumped 31% to $35.8 billion. In contrast, Xbox content and services revenue fell 10%, while Xbox hardware revenue dropped 13%.

Microsoft reported a strong fourth quarter, but its Xbox business continued to struggle, with both gaming content and console hardware revenue falling year-over-year. For the quarter ended June 30, Microsoft posted $90 billion in revenue, up 18%, while net income jumped 31% to $35.8 billion. In contrast, Xbox content and services revenue fell 10%, while Xbox hardware revenue dropped 13%.

Microsoft reported a strong fourth quarter, but its Xbox business continued to struggle, with both gaming content and console hardware revenue falling year-over-year.

For the quarter ended June 30, Microsoft posted $90 billion in revenue, up 18%, while net income jumped 31% to $35.8 billion. In contrast, Xbox content and services revenue fell 10%, while Xbox hardware revenue dropped 13%.

The decline is particularly noticeable compared with the same quarter last year, when Xbox content and services revenue grew 13%.

Across fiscal 2026, Xbox revenue fell by $1.7 billion, or 7%. Xbox content and services revenue declined 5%, with Microsoft pointing to a stronger first-party content performance in the previous year. Growth in Xbox Game Pass partly offset the decline.

Xbox hardware performed even worse, with revenue falling 29% for the full year as fewer consoles were sold.

The results come during the biggest restructuring in Xbox history. CEO Asha Sharma announced plans earlier this month to cut around 3,200 positions during fiscal 2027. About 1,600 roles were eliminated immediately, with further cuts planned over the following year. Four studios are also leaving Xbox under new management.

The company is narrowing its investments after Sharma said Xbox had spread its resources too widely. Reports indicate that Microsoft is putting greater emphasis on major franchises, including Fallout and The Elder Scrolls, while moving away from some smaller studios and projects.

Microsoft acquired Activision Blizzard in 2023 for $68.7 billion, significantly expanding Xbox’s publishing business with franchises including Call of Duty.

Xbox is also dealing with rising hardware costs. Microsoft is preparing another console price increase from August 1, with the standard 1TB Xbox Series X set to rise from $649 to $799. The digital Series X will increase to $749.

At the same time, Microsoft is developing its next-generation Project Helix hardware.

Despite Xbox’s weak results, Microsoft CEO Satya Nadella said the company is making changes across content, platforms and operations to reset the gaming business for long-term growth. Microsoft expects Xbox to return to growth in fiscal 2027.

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