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Xbox business sees operating income plunge 94% in Q1

Microsoft shipped 1.7 million Xbox 360 consoles in the first quarter

Microsoft has announced its first-quarter earnings for the period ended on September 30, and the Entertainment and Devices Division, which houses the Xbox and interactive entertainment business, saw revenues roughly flat year-over-year at $1.95 billion while operating income dropped precipitously, down 94 percent to just $19 million, but at least the company remained in the black. Shipments of the Xbox 360 console dipped from 2.3 million to 1.7 million units for the period.

A large part of the blame was attributed to the tough comparison with last year's blockbuster release of Gears of War 3. "Video game revenue decreased primarily due to the release of Gears of War 3 in the first quarter of fiscal year 2012 with no comparable major releases in the first quarter of fiscal year 2013," the company explained.

Overall, Xbox 360 platform revenue decreased $418 million (24 percent), "due mainly to lower volumes of consoles sold and lower video game revenue, offset in part by higher Xbox LIVE revenue."

Microsoft as a whole announced quarterly revenue of $16.01 billion for the quarter with net income of $4.47 billion. The current quarter will be a crucial one for the company with the release of Windows 8, the Surface tablet, and in the Xbox space, of course, Halo 4.

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Latest comments (13)

Richard Gardner Artist, Crytek4 years ago
Here is the cue we have being waiting for. Sales are down, bring on the next generation announcements!
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Alfonso Sexto Lead Tester, Ubisoft Germany4 years ago
Agreed, It's surprising that after all this years they keep shelling machines. The console sector need to renovate itself.
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Kingman Cheng Illustrator and Animator 4 years ago
Indeed, see you next consoles soon!
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Show all comments (13)
Andrew Goodchild Studying development, Train2Game4 years ago
Except Halo 4 could help redress that second quarter.
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Dan Howdle Head of Content, Existent4 years ago
Of course, we know Microsoft is screwing the pooch waiting so long for a new console launch. Now they know it, too.

Yours sincerely,
The Pooch
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Klaus Preisinger Freelance Writing 4 years ago
With no shortage of consoles being sold below 100 on Ebay, it can hardly come as a surprise.
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Jim Webb Executive Editor/Community Director, E-mpire Ltd. Co.4 years ago
No Bruce, this doesn't mean consoles are doomed. It's just how the tail end of a console cycle works.

Wait, he hasn't posted about the doom of consoles yet? That's more surprising than MS's fiscal report.
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West Clendinning Senior/Lead Artist, Rovio Entertainment4 years ago
Seems in contrast to your article only a week or so ago.
http://www.gamesindustry.biz/articles/2012-10-11-xbox-360-sells-270-000-units-in-us-during-september

Edited 1 times. Last edit by West Clendinning on 19th October 2012 1:58pm

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Jim Webb Executive Editor/Community Director, E-mpire Ltd. Co.4 years ago
West, while it was the leading console in the US last month, all consoles are down year on year. So at the moment, just because you are leading doesn't mean you are financially succeeding.
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West Clendinning Senior/Lead Artist, Rovio Entertainment4 years ago
Jim,
I understand. The previous article just seemed more optimistic about the figures and the sustainability of the current Gen consoles is all.
Which sparks responses along the lines of - " Current Gen consoles are fine, what we need is better games."
Articles like this in turn insight an almost contrasting view of - " We need new Consoles, new games aren't enough"
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Jim Webb Executive Editor/Community Director, E-mpire Ltd. Co.4 years ago
To be fair, I only see 3 comments from that article and none parallel what you stated though I don't doubt that was a common statement made at other media outlets.

As for here, we've long noted a new round of consoles are needed.
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Brian Lewis Operations Manager, PlayNext4 years ago
I am beginning to wonder if Microsoft has accidentally stumbled upon an improved business model, and is looking to exploit it.

The existing consoles are old, and need a refresh to re-generate the market. However, a LOT has changed in how people play games, from the inclusion of the internet, to the use of mobile.

In a few weeks Microsoft will be launching Windows 8. This is an OS designed to operate on cheaper hardware, and that will also include mobile. However, it has a down side as well. It is not very business or consumer friendly (in non Pad/Mobile devices).

It would be possible (yes, I know that this is a stretch of the imagination to think that MS could plan this far ahead) for MS to extend the life of the 360 for a few years (to retain its existing lead). In about 1 year it could also start supporting games on Windows 8 (not Vista/7) as a way to 'bridge' the gap to the new console. A few years later, after having established the Win8 Games market, they could then launch Win9, and a Win9 console (hardware spec) to make a standardized gaming platform.

I am sure you all can see how this would be a very powerful progression for Microsoft.. lbut also how unlikely it is that they would plan this out.
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Alfonso Sexto Lead Tester, Ubisoft Germany4 years ago
@Jim: You made my day! Thanks for that

@Andrew: You make a good point there.

Edited 1 times. Last edit by Alfonso Sexto on 22nd October 2012 9:56am

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