Xbox Predicts 'Hardware Decline' Despite Huge Revenue Boost From ActiBlizz

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Microsoft's latest earnings report has been an eye-opening one, with its gaming division posting huge revenue boosts - propelling the sector to Microsoft's third largest business within the company. While much of that is attributed to the acquisition of Activision Blizzard, one area that doesn't seem to be growing so fast is Xbox hardware.

As pointed out by The Verge, Xbox hardware is flatlining somewhat - and the team is even predicting an impending decline for Xbox sales. Microsoft CFO Amy Hood blames "a weaker than expected console market" for slow sales during the Holiday season, while also predicting that Xbox hardware will "decline year-over-year" for the next financial quarter.

Basically, Microsoft is expecting hardware sales to be lower than the same time last year, which is unfortunate if not entirely unpredictable. Last year didn't always make for the most positive reading when it came to Xbox sales, with European hardware sales seemingly struggling in 2023.

Thankfully, the rest of Microsoft's gaming division is looking very healthy indeed - as we've already spoken about here at Pure Xbox. Content and services revenue is on the up, and the purchase of Activision Blizzard is helping Microsoft cement its gaming division as one of the strongest in the industry




 
Yeah, I can see Xbox pushing more and more into xCloud. It may be that the next console from Microsoft may be the last in its current hardware heavy form.
 
Damn well hope revenue is up, when you spend $70b you tend to pick up the revenue of the purchased company.

The hardware thing is interesting. On one hand MS have pushed to narrative of having GP everywhere so hardware doesn't matter, on the other hand hardware does absolutely matter.

MS might be wise to make a copycat Steamdeck like the Ally etc and label it as a GP machine. Let it run Steam as well, so what, at least they have a device that's "go anywhere" and can help get GP subs.
 
Quite honestly if Playstation open the door to Game Pass I don't see any reason for Microsoft to still make the Xbox.

Focus everything on services and Cloud but then again the cloud is somewhat reliant on the hardware but that's not really one and the same thing anyway.

But then at the same time I would like to see them embrace Apple and push Game Pass onto the Apple TV and iPhone/iPad and MacBooks, which may become a very real thing with these recent European changes required with side loading and alternative payments.
 
Quite honestly if Playstation open the door to Game Pass I don't see any reason for Microsoft to still make the Xbox.

Focus everything on services and Cloud but then again the cloud is somewhat reliant on the hardware but that's not really one and the same thing anyway.

But then at the same time I would like to see them embrace Apple and push Game Pass onto the Apple TV and iPhone/iPad and MacBooks, which may become a very real thing with these recent European changes required with side loading and alternative payments.

MS will probably move into the 12 month subscription with "free" handheld xCloud device.

Or even partner with hardware vendors like you mentioned, Apple, Google, Roku to get the Game Pass platform to almost everyone via streaming devices.
 
Quite honestly if Playstation open the door to Game Pass
Why would Sony do that?

Only way would be if MS give them a cut of the subscription fees and then why would MS do that?

Same goes for Apple, Roku etc. How do they get paid by MS for opening it up?
 
Same goes for Apple, Roku etc. How do they get paid by MS for opening it up?

Streaming services are already in partnerships with Roku and Google for example. The streaming services pay for a dedicated button (Netflix, YouTube, Rakuten) on the remote controls of the hardware vendors. They also pay for pre-installed apps on the streaming devices. Also, on Google for example, looking at the home page adverts, the steaming services are probably also paying to have a new movie on front and centre on the home page of the device.

Many ways to monetise.
 
With the rumors that MS is getting rid of physical game releases and shifting all their resources to digital publishing and cloud gaming, the next Xbox whatever is probably the last. Would not be surprised if Xbox brand get slowly redundant while everything is rebranded as Microsoft gaming.
 
Why would Sony do that?

Only way would be if MS give them a cut of the subscription fees and then why would MS do that?

Same goes for Apple, Roku etc. How do they get paid by MS for opening it up?

Microsoft steps out of the hardware game and gives them that share.

Give 20% away to make 200% more.

Simple business economics.
 
Reminds me a little of what happened to SEGA back in the day - Halo or Gears on Playstation one of these days?
 
With the rumors that MS is getting rid of physical game releases and shifting all their resources to digital publishing and cloud gaming, the next Xbox whatever is probably the last. Would not be surprised if Xbox brand get slowly redundant while everything is rebranded as Microsoft gaming.
The Xbox brand is still strong. Will be interesting to see if they change it to Microsoft Gaming or something else.

Either way, I still believe the next Xbox console will be the last "power" console released by Microsoft. As it has a planned release date for 2027/28, it can easily carry the Xbox brand until 2035, and by that time things will be very different and cloud gaming might be the norm, at least from a MS point of view.
 
Microsoft steps out of the hardware game and gives them that share.

Give 20% away to make 200% more.

Simple business economics.
MS are stepping out of it anyway. No guarantee that they will make 1% more with no hardware, they still have to incentivize other companies to allow GP access. Apple, Roku etc could be convinced with a small licensing fee since they don’t really have a competing product.

Sony would be totally different. Putting a competing subscription on their platform only makes sense if they are getting a substantial cut. Don’t think MS would go for that.

I’m not sure that MS would see many more subs from this anyway, probably just the same current userbase playing on more devices, that can be monetized but it’s not going to draw in millions of new users. The mobile space is where the money is, and that’s where the ABK purchase will probably come good.
 
MS need to decide WTF they want to be in the space. I'm sure they can make anything work if they have a clear vision but this just seems so messy.

I'm guessing Phil is losing some boardroom fights now.

I'm a fan of Machine Games, so nice to hear mention of the new Indiana Jones game coming to PS5. There was talk a few weeks back that MS was planning to go multiplatform with their Activision Blizzard titles.
 
I mean if they launch Xbox exclusives on other platforms a year later I don't really see a problem.

The Xbox die hards can get their day one fix and Game Pass still carries value there.

Other platforms get it later and they pay real money for it and also drum up new excitement for the games and so they get a kind of mid cycle refresh of interest.

Nobody loses.

It's not unlike the model Playstation is using for PC right now.

With all the platforms being X86 now the effort required is also very minimal compared to a couple of years ago.
 
I mean if they launch Xbox exclusives on other platforms a year later I don't really see a problem.
Agreed.

The Xbox die hards can get their day one fix and Game Pass still carries value there.
I *think* the realisation has hit that this model cannot work without jacking up the GP prices to a place where people will jump ship.

Other platforms get it later and they pay real money for it and also drum up new excitement for the games and so they get a kind of mid cycle refresh of interest.

Nobody loses.

It's not unlike the model Playstation is using for PC right now.
Yup, they can do something here that makes sense i'm sure. Sony are even worse (better for them) that they get that first year sales outside of the subscription model too.
 
I don't care if all the games go to PS5, as long as it comes to GP then I am happy.

BUT with them being extremely non-committal with the Activision games and Game Pass, I won't be surprised if those don't get released on GP.
 
Looks like timed exclusives will be the way forward for MS then.

That said, I would even go as far to say Sony execs have very likely thrown around the idea to release PS exclusives to Xbox after a timed exclusive period ends. Just think of the dosh Sony can make by releasing TLOU or GOW or SM to Xbox, they will make a killing.

And overall, just think how aweome it would be to play either XB or PS games without having to different hardware. We can dream right?
 
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