Microsoft is struggling to pick up hardware sales towards the end of the current generation of consoles, but other games revenue is growing.
Microsoftgaming revenue was dragged down by weak Xbox console sales. As the end of the current console generation approaches, buying a new system is not at the forefront of gamers’ minds, as many anticipate the imminent launch of the Xbox Series X. Each new generation of consoles will presents as the most innovative to date. , which is not surprising given how quickly the technology is advancing. However, the gaming industry has increasingly embraced the games-as-a-service model, in which subscription services are one of the preferred ways players can access their games.
To that end, the Xbox brand has pushed its Game Pass service, which gives fans access to over 100 high-quality titles, and has even begun to bundle other services, like Xbox Live Gold and xCloud, into its offerings. Many companies, including Microsoft and Sony, benefit more from these subscription services than from consumers purchasing actual hardware. However, these services put gamers at the mercy of owners, meaning that if they choose to remove a game from the service, users no longer have access to it unless they purchase the game directly.
As the industry continues to reflect growing trends, Microsoft revealed to gamesindustry.biz that poor console sales led to lower gaming revenue. The company’s hardware sales are down 31%, and parent company Xbox has suggested that the end of the current generation of consoles is the reason for this reduction in quantity sold as well as lower prices. However, despite the decline in console sales, Microsoft’s games revenue – according to its financial statements – saw a net increase of $189 million (about 2%) as of June 30, 2020.
This net profit from gaming revenue is the result of “Revenue from Xbox content and services [being] up $943 million, or 11%.” Minecraft, third-party games and subscription growth are responsible for this improvement, as is the increase in engagement caused by the COVID-19 lockdowns. Xbox Game Pass and Minecraft were the main areas where engagement and gaming revenue grew.
The Xbox One debuted in 2013, kicking off the current generation of consoles. In the nearly seven years since its launch, the Xbox One family of devices has had to catch up with Sony’s PlayStation 4, largely due to poor marketing choices (in particular, the lack of focus on gaming ) made by Microsoft at the start of this console. generation. Although it has covered some of the ground lost since then, the Xbox One has seen lackluster sales since its inception compared to the PlayStation 4.
While the approaching end of this console generation is certainly a contributing factor to declining hardware sales, as well as Sony having a bigger global presence in the gaming industry than Microsoft, it’s mostly a symptom of a much deeper problem. Next-gen is getting a little more promising for Microsoft as it looks to rebrand Xbox Game Pass and refocus its entire gaming division on subscriptions and first-party titles to bolster the Xbox series Xbut only time will tell if this approach will truly make up for seven years of questionable decision-making.
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