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Microsoft blames declining Xbox game and service revenue on third-party games

Microsoft's Q4 results are light on game numbers, but the company says that its video game-related revenue rose, while Xbox content and services revenue dropped from 2020.

It’s the end of Microsoft’s fourth quarter for the 2021 fiscal year, and while video game-related revenue is slightly up at the company, Xbox content and services revenue has ticked slightly downward over the slow summer season.

Microsoft closed the quarter ending June 30 2021 with $46.2 billion in revenue, a 21 percent increase year-over-year. It had an operating income of $19.1 billion, an increase of 42 percent from last year.

The company continues to play coy with all of the numbers out of its Xbox business but its game-related numbers this year are interesting.

Gaming revenue increased by $357 million (11 percent) in the last year, and Xbox hardware revenue increased 172 precent thanks to the debut of the Xbox Series X|S. However Xbox content revenue dropped four percent to $128 million.

Microsoft says that even though Game Pass subscriptions and first-party titles did numbers during the quarter, those gains are offset by a decrease in third-party game purchases.

There doesn’t seem to be any one major 2020 title that drove last year’s increased revenue, but Microsoft does note that its 2020 third-party performance was impacted by stay-at-home orders tied to the spread of COVID-19.

There’s nothing particularly apocalyptic or optimistic about that decrease, but it’s interesting that last year’s gains were so strong in third-party services that their 2021 drop can cause Microsoft to register a slight revenue loss.

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