It was another not-great quarter for Xbox, and that’s probably not great news for a division of Microsoft that in the minds of many observers is already up against the wall. But CEO Asha Sharma is having none of that defeatist talk, saying after the company posted its result that she expects Xbox to return to growth by the end of the 2027 fiscal year.
Xbox content and services revenue for the company’s fourth quarter were down 10% compared to the previous year, while operating expenses increased by 8%, which chief financial officer Amy Hood said in an earnings call was driven by investments in R&D and impairment charges. Operating income decreased 14%, and operating margins were down by 21%.
The full year picture painted in Microsoft’s annual Form 10-K SEC filing isn’t any prettier: “Xbox revenue decreased $1.7 billion or 7% driven by declines in Xbox content and services and Xbox hardware. Xbox content and services revenue decreased 5% on a prior year comparable that benefited from strong first-party content performance, offset in part by growth in Xbox Game Pass. Xbox hardware revenue decreased 29% driven by lower volume of consoles sold.”
So, simply put, game sales are down, console sales are down, and that’s not ideal. Coupled with massive layoffs over the past two years that have left numerous studios gutted or gone, a big shakeup at the top, and a strategy that can’t readily be discerned from the outside (beyond ‘slash-and-burn’), and it looks especially bleak if your outlook on the future of Xbox is already less-than-optimistic.