Xbox hits new user records as Microsoft reports decline in Xbox sales and game revenue

Microsoft released its latest earnings report for the quarter ended Dec. 31, less than a week after it announced it would lay off 10,000 people. The tech giant reported an overall drop in revenue, as well as a 13% drop in gaming revenue.

Xbox hit a new MAU (monthly active users) record of 120 million for the last period and Xbox Game Pass continued to grow, but that was the extent of the bright spots for Xbox during the quarter.

Both hardware and content sales were down for Xbox compared to the same period last year, with console sales down 13% and content and services down 12%. Microsoft points out that this comparison is against a “strong last year,” pointing to “decline in first-party content and lower third-party content revenue” for the decline. This was partially offset by the continued growth of Xbox Game Pass, Microsoft added.

Microsoft’s latest consoles, the Xbox Series X and Series S released in 2020, initially outpacing demand. In its most recent financial quarter, revenue from console sales was down 13%, with Microsoft pointing to lower prices during the holiday season, as well as an overall drop in console sales.

The report comes on the heels of a major layoff involving 10,000 employees across Microsoft’s various divisions, and notes $800 million in layoff costs related to the action. Combined with other costs associated with the downsizing, the layoffs cost Microsoft an estimated $1.2 billion.

Microsoft is still seeking to acquire gaming company Activision-Blizzard in a $68.7 billion deal despite regulatory hurdles and antitrust issues.

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