Starfield Gives Xbox One of its Best Non-Holiday Quarters, Xbox Series X/S Slump Continues


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Microsoft has reported its earnings for Q1 2024 (unusually, their fiscal year runs from the beginning of July to the end of June) and it was a good three months for the company, including the Xbox gaming division. Xbox is often one of the weaker divisions of the tech megacorp, but that wasn’t the case this quarter – Gaming revenue was up 9 percent compared to Q1 2022, with Xbox content and services revenue up 13 percent thanks to the much-anticipated release of Starfield and a boost in Game Pass subscriptions that saw a record number of hours played. Speaking of records, Twitter user John Welfare has been tracking the percentages the Xbox business has gone down quarter-to-quarter, and estimates Q1 2024 was Xbox’s best non-holiday quarter ever. These aren’t official numbers, but still, food for thought.

During Microsoft’s Q1 earnings call, Microsoft CEO Satya Nadella provided the following positive assessment of the Xbox division…

“We were delighted to close our acquisition of Activision Blizzard King earlier this month. Together, we will advance our goal of bringing great games to players everywhere on any end point. Already with Game Pass we are redefining how games are distributed, played, and discovered. We set a record for hours played for subscribers this quarter. We released Starfield this quarter to broad acclaim, more than 11 million people have played the game to date. Nearly half of the hours played have been on PC and on launch day we set a record for the most Game Pass subscriptions added on a single day. Additionally, Minecraft has now surpassed 300 million copies sold.

With Activision Blizzard King we now add significant depth to our content portfolio. We will have 13 billion-dollar-plus franchises, from Candy Crush, to Diablo, and Halo, to Warcraft, Elder Scrolls, and Gears of War. We’re looking forward to one of our strongest first-party holiday lineups ever, including new titles like Call of Duty: Modern Warfare III and Forza Motorsport.”

It wasn’t all good news. While Gaming content revenue was up 13 percent, Xbox Series X/S sales were down 7 percent despite Starfield’s release (Nadella mentioned over half of the 11 million who have played Starfield have done it on PC). Interestingly, Nadella has also quietly stopped tying his own bonuses to Game Pass growth. While the service has continued to grow and no doubt got a nice boost from Starfield, it has fallen short of Microsoft’s goalposts for several years, and it’s likely FY2023 was no different.

But, those bits of bad news aside, it’s still a whole new world for Xbox going forward. According to Microsoft CFO Amy Hood, they expect Gaming division growth in the 50-percent range over the next year thanks to the acquisition of Activision Blizzard, and that may just be the beginning.

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