Microsoft's Gaming Revenue Drops by 4% in Q3 2023

Microsoft has released a financial report for the third quarter of fiscal year 2023 covering the time frame between January 1 and March 31. 

During Q3, the company generated $52.9 billion in revenue and recorded a net income of $18.3 billion, representing an increase of 7% and 9%, respectively.

In the previous quarter, Microsoft encountered a challenging period regarding Windows and device revenue, and the situation remains largely unchanged in Q3. The revenue from Windows OEM, which represents the fee paid by PC manufacturers to Microsoft for installing Windows on their products, dropped by 28% during Q3. Meanwhile, revenue from devices has declined by 30%.

Xbox hardware revenue has decreased by 30% in the third quarter, whereas there has been a marginal growth of 3% in Xbox content and services revenue due to the growth of Xbox Game Pass. Consequently, Microsoft's overall gaming revenue witnessed a 4% decline and amounted to about $3.59 billion.

However, as pointed out by the independent analyst DomsPlaying, despite experiencing a decline in performance across several critical segments, the $3.59 billion figure still represents the second-highest third-quarter earnings for the Xbox business. The previous fiscal year's Q3 revenue of $3.74 billion still holds the top position, as Microsoft's gaming business recorded its highest-ever revenue for a non-holiday quarter during that period.

Despite the drop in its gaming division, devices, and Windows revenue, Office, cloud, and server products have compensated for the loss. Revenue from server products and cloud services has increased by 17%, with a 27% surge in Azure revenue. Microsoft attributes this growth to the robust demand for its consumption-based services.

Analysts note Microsoft's challenges are overstated by ordinary players, as the company continues to fare well and expand in some sectors like services. According to them, the primary hurdle that Microsoft needs to overcome is ensuring a consistent supply of Xbox consoles, especially Series X.

As per analysts' predictions, the upcoming quarter is anticipated to be a significant one for Microsoft in terms of gaming revenue and revenue growth from subscription services, with the launch of highly anticipated games such as Redfall and Starfield.

You can find Microsoft's report here. Also, don't forget to join our 80 Level Talent platform and our Telegram channel, follow us on Instagram and Twitter, where we share breakdowns, the latest news, awesome artworks, and more.