Microsoft sees dip in quarterly Xbox revenue as hardware sales slow

Microsoft has closed out the fourth quarter of its 2019 fiscal year with year-over-year decreases in both its game and Xbox businesses, declines that come as the next generation of consoles looms on the horizon.

For the quarter ending June 30, the company reported a $233 million decrease in game revenue, down about 10 percent from the same period last year. That makes for just over $2.05 billion in game revenue, down from $2.29 billion during the same period last year.

Microsoft’s earnings report calls out a 48 percent year-over-year decline in Xbox hardware revenue specifically, noting that the shift was mainly due to a decrease in consoles sold during the quarter. Xbox software and services, meanwhile, fell by 3 percent year-over-year, offset partially by a rise in subscriptions. Microsoft notes that it had a strong Q4 in that category last year, which likely also contributed to the year-over-year decline.

However on a yearly basis, the company saw an increase in game revenue. Its games business as a whole saw $11.39 billion for the 2019 financial year, up from $10.35 billion in 2018. Monthly active Xbox Live users have also increased over the last year. As of June 30, 2019, Xbox Live has 65 million MAUs, up from 57 million at this same point last year.

In its full report, Microsoft also called out games, cloud/AI engineering, and GitHub as three of the four departments responsible for a 15 percent increase in its R&D expenses.