Microsoft recently shared its second-quarter earnings for the 2020 fiscal year and things aren’t looking great. General game-related revenue is down 21% from last year to the tune of a $905 million decrease. As indicated in the report, the main reason is that revenue from Xbox One console sales is down but almost half.

Microsoft is stating that decline is due to fewer people jumping on sales during the holidays. It’s also something to be expected as 2020 will see the release of a brand new Xbox device. Customers are likely biding their time until the Series X is on store shelves. This drop is similar to previous trends, just a little steeper.

Sadly, even software sales have seen a decline. In what Microsoft calls “content revenue,” that has seen a decline of 11% over last year, down $295 million. Q2 2019 had a very strong showing from third-parties on the platform, but that middle of the year increase is what created the later year decrease. People were already content with the games they had.

This is where Game Pass comes in. Despite the other sections of Microsoft’s business seeing decreases, spending on services has increased. There isn’t a specific figure to reference, but the report reads that declines in profits were “offset in part by growth in subscriptions.” This includes both Xbox Live and Game Pass, but we know that Game Pass is doing well. Microsoft recently stated so.

This entire generation has been a hard battle for Microsoft. While sales of the Xbox One aren’t bad by any stretch, they are less than half of what Sony has managed with the PS4 and are now behind even the Nintendo Switch. Microsoft’s showing at E3 2013 tremendously hurt the launch potential of the Xbox One and it seems nothing over this last generation helped push people towards the platform.

With the company practically moving away from dedicated consoles and turning Xbox into a brand, it’ll be interesting to see what this next-generation brings. Microsoft has revenue coming in from other avenues, so we’ll likely never see the Xbox completely disappear. There’s a chance that its consoles may morph into PC hybrids, though.

Source: Microsoft

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