Amid Microsoft’s record-breaking layoffs, the company shared some disappointing revenue reports for Xbox in its most recent quarter earnings. Xbox revenue decreased 13%, along with a 12% decline in Xbox content and services revenue in the second quarter of fiscal ’23. Overall, Microsoft’s gaming revenue decreased 13% year-over-year. Xbox sales were weak during the 2022 holiday sales, which tend to be a high point for annual earnings. It didn’t seem like many people wanted an Xbox for Christmas this year.
In the Second fiscal year report for the second quarter of 2013Microsoft claims that the decline in revenue is related to strong Xbox growth in the first quarter. In the Previous quarter revenue reportMicrosoft revealed that hardware grew 13%, which stemmed from the growth of Xbox Game Pass subscriptions. In the previous year, Xbox Game Pass had grown to 25 million subscribers, but the service hasn’t seen a major update since then. With Game Pass stagnating, Microsoft hasn’t been able to grow its subscription numbers as much as during the same time last year. The price of the Xbox Series S dropped to $249.99 for the 2022 holiday season, as Microsoft hopes to sell more consoles and get consumers more interested in Game Pass, but it ended up not being the case.
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Microsoft also saw revenue declines in many different markets. PC revenue fell 39% in the second quarter, even though Microsoft launched several new devices in time for the holiday season, such as the Surface Pro 9. However, even though gaming and PC revenue declined, overall PC revenue rose. Microsoft in the second quarter increased by 2%. Microsoft Cloud revenue rose more than 20% in the second quarter, while other Microsoft Office and server products also saw profits increase.
The report for the second quarter of fiscal year ’23 comes days after Microsoft announced that it would lay off fewer than 10,000 employees as part of “macroeconomic conditions and changing customer priorities.” The layoffs included Xbox and Bethesda employees. Despite the layoffs, Microsoft is still moving ahead with its $69 billion acquisition of Activision Blizzard, while the Federal Trade Commission has made clear its intent to block the merger.