How’s Xbox Doing? Here Are The Key Takeaways From New Earnings Report

Technology giant Microsoft has announced earnings for its latest fiscal quarter, and the report shines a light on how the Xbox business is doing–though it’s becoming harder to know.

Microsoft’s Xbox business is housed within the company’s More Personal Computing division. That business unit reached $11.1 billion in revenue for the quarter ended September 30, and that’s up 4 percent year-over-year. More Personal Computing also includes things like Microsoft Surface, search advertising revenue on Bing, Windows OEM revenue, and more.

In terms of Xbox-specific stats, Xbox Content and Surfaces Revenue was up 1 percent. This includes revenue from Xbox Live–including transactions, subscriptions, cloud services, and advertising. Additionally, it counts sales of Microsoft’s own video games and royalties from third-party games sold on Xbox devices.

Minecraft experienced “strength” in subscription sales, Microsoft said, but overall sales declined due in part to a tough comparison to this time last year when a “third-party title” was performing well. This is likely a reference to Fortnite, which has moderated in revenue.

Minecraft is quietly among the most popular games on planet Earth. The game has more than 112 million monthly players, which is many millions more than Fortnite’s latest publicly released numbers.

Overall gaming revenue for Microsoft was down 7 percent

Microsoft no longer reports Xbox Live active users, which makes understanding the company’s fortunes more difficult to understand, but the company did share that total gaming revenue during the quarter was $2.542 billion, which is down $2.738 billion from the same period last year. Hardware specifically was down 34 percent due to fewer consoles sold. That’s to be expected given the Xbox One is at the end of its lifecycle with the new, more powerful Project Scarlett coming in Holiday 2020.

Another interesting note from Microsoft’s earnings report was that total Research & Development expenses jumped by $588 million, or 15 percent, due in part to efforts related to gaming (among other things).

2020 will be a big year for Xbox with the launch of Scarlett and Halo Infinite. Not only that, but Microsoft’s new streaming service, xCloud, is expected to continue its rollout throughout 2019 and into next year.

Microsoft’s total revenue–across all of its business units–reached $33.1 billion for the latest quarter, which is up 14 percent. Total income was $10.7 billion.