Xbox Hardware Declines But 'Content & Services' Grows In FY25 Q2 Earnings Report

Microsoft has released its earnings report for the quarter ending December 31st, 2024 today (FY25 Q2), which highlights how the business performed during that quarter compared to the same period the year before.

In terms of Xbox, Microsoft mentions that a "business highlight" is the 2% increase in content and services revenue, said to have been driven by growth in Xbox Game Pass. Previously, this area grew by a whopping 61% back in FY25 Q1.

As expected, hardware revenue unfortunately suffered another decline by 29%, while gaming revenue declined by 7%.

Back in October, Microsoft predicted the results for Xbox in FY25 Q2 - very accurately as it turns out!

Microsoft CFO Amy Hood (speaking in October 2024): "In Gaming, we expect revenue to decline [in FY25 Q2] in the high single digits due to hardware. We expect Xbox content and services revenue growth to be relatively flat. We’re excited about last week’s launch of Call of Duty where we saw the most Game Pass subscriber adds we’ve ever seen on a launch day. There are two things about the launch that are different than the Call of Duty launch a year ago where revenue was mostly recognized in the quarter of purchase. First, the game is available on Game Pass so for players who play through Game Pass, the subscription revenue is recognized over time. Second, the game requires an online connection to play so even for players who purchase the standalone game, revenue recognition will also occur ratably over time."

The continual increases we're seeing to content and services these days, combined with the reduction in hardware revenue, suggests Xbox's multiplatform push could work out very well for the brand in the long run. We'll wait and see!