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Microsoft gaming revenue stalls ahead of Xbox One X launch

Strong Xbox software and services revenue offset by lower hardware revenue

Microsoft's gaming revenue has stalled according to the latest quarterly report.

While overall Microsoft revenue reached $24.5 billion, a year-on-year increase of 12%, gaming revenue was up by only 1% (0% in constant currency).

Gaming revenue for the quarter ending September 30, 2017 reached $1.89 billion, edging up slightly from $1.88 billion over the same period last year.

Xbox software and services revenue grew up 21% (20% CC) driven by continued momentum in digital distribution and strong game title performance, but offset by a lower hardware revenue.

The number of Xbox Live active users sits at 53 million, meaning a year-on-year increase of 13%. However, the number has not grown from the previous quarter and remains lower than it was during the three month period ending December 31, 2016 where it reached 55 million.

Looking forward to the next quarter, Microsoft CFO Amy Hood said: "We expect revenue growth from the launch of the Xbox One X console and continued healthy growth of software and services revenue. In Q2, the higher mix of gaming hardware revenue will significantly impact both the segment and company gross margin percentages."

Company-wide net income was $6.6 billion, a year-on-year increase of 16%.

Microsoft CEO Satya Nadella said: "Our results reflect accelerating innovation and increased usage and engagement across our businesses as customers continue to choose Microsoft to help them transform."

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Latest comments (2)

Ben Link Video Game Enthusiast and Graphic Artist 2 months ago
This isn't a story. Console sales have stalled because of a new console launching. How long have you covered the industry? It's not a phenomenon. For how little exclusives they have this year. This is actually quite surprising that they went up in revenue. That should be the story....
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Jordan Lund Columnist 2 months ago
Hardware sales ALWAYS drop pending a new release or refresh. This is common knowledge.
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