- Microsoft’s overall revenue has been increasing rapidly, but the hardware sales are taking a dive.
- The gaming giant has predicted lower hardware sales next quarter amid the struggles.
- Aside from that, Xbox has a solid gaming lineup ready for 2024.
The last year has been a mixed bag for Xbox as it released great games like Starfield and poor ones like Redfall. The gaming giant has also evolved continuously after merging with Activision Blizzard.
Xbox has doubled down on game publishing, and it has more exclusives this generation than PlayStation. However, despite promising exclusives moving forward, it predicts lower hardware sales next quarter.
Why it matters: Xbox has reportedly lost 3:1 to PlayStation in terms of hardware sales this generation.
Big overall revenues for Microsoft Gaming but on flipside hardware continues to be a struggle for Xbox Series
Hardware forecast next quarter is a decline YoY and revenue forecast points to low units. Microsoft Gaming growing in other areas but hardware performance is contracting
— Benji-Sales (@BenjiSales) January 31, 2024
Microsoft recently revealed its financial earnings report. In terms of overall revenue and earnings, Xbox set a new record thanks to the impact of Activision Blizzard, with a 49% uplift.
However, hardware revenue only grew by 3% over the last year. This was already concerning, but Xbox appears to be ahead of the curve in recognizing the issue.
Next quarter, the Xbox Series S|X hardware is expected to see a drop in revenue year-on-year. This is a result of various factors, including Microsoft’s dwindling focus on exclusives, with rumors pointing to multiplatform releases for games like Hi-Fi Rush.
Splitting up the market with two different Xbox consoles has not worked too well either. It seems like there wasn’t enough focus on either one of them, which has caused some concerns.
Meanwhile, rival consoles like the PS5 and Nintendo Switch continue to succeed. Therefore, Microsoft’s focus on an ecosystem might be actively harming its console business.
Still, the list of first-party games in 2024 is by no means weak. Hellblade 2 and Indiana Jones are two big AAA titles that should help move Xbox Series S|X consoles, but Microsoft needs to come up with a new strategy.
Perhaps using Activision Blizzard to produce a few AAA exclusives could help the hardware business make up for lost ground.
Elsewhere, Microsoft faced the challenge of layoffs. 1900 Xbox employees were laid off this month, overshadowing the positive impact of the merger to an extent. Anyhow, the future holds a lot of promise for Xbox, but the gaming giant needs to ensure it avoids any major missteps moving forward.
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