The decline in Xbox {hardware} income has develop into so predictable you could possibly set your Starfield watch to it. Microsoft reported its second-quarter earnings on Wednesday and, sure, console gross sales are down but once more. However the remainder of the gaming division didn’t have a such a scorching vacation both. The corporate is blaming year-over-year declines on the dearth of robust releases close to the top of 2025. Hmmm.
“Xbox content and services revenue declined 5 percent (down 6 percent CC) on a prior year comparable that benefited from strong first-party content performance,” reads the corporate’s latest earnings presentation. “Xbox hardware revenue declined 32 percent.”
However final yr’s numbers weren’t precisely stellar. The gaming division saw a 7 percent decline total within the second quarter. Xbox {hardware} was down 29 p.c this time in 2025, whereas content material and providers have been solely up 2 p.c. Vacation 2024 had Indiana Jones and the Nice Circle and Microsoft Flight Simulator 2024 however was in any other case quiet.
Vacation 2025, however, noticed the discharge of Ninja Gaiden 4 and The Outer Worlds 2, whereas Flight Sim got here to PS5. Additionally the underperforming Name of Obligation: Black Ops 7 which, mixed with a significant Sport Move worth hike, might need led to a spike in churn. We don’t know, although, as a result of Microsoft nonetheless isn’t releasing new subscriber numbers.
All we all know for positive is that the Xbox Sequence X/S is an ever-shrinking a part of the equation for Microsoft Gaming and the corporate on the whole. And it’s been that means almost every year since the consoles launched. The corporate has promised new hardware however the priorities of the evolving Xbox platform appear to more and more lie past it.
With the AI arms race led by Microsoft and others spiking gaming hardware costs in the near term, possibly that’s for the most effective.
