Today Microsoft released its financial results for its third quarter of 2016, the three-month period ended March 31, 2016.
Minecraft sales drove up its game software business 9 percent, but Xbox hardware revenues slumped 26 percent in the quarter, due to the one-two punch of Xbox 360's continued obsolescence and lower prices on Xbox One hardware.
Microsoft announced this week that it will cease to manufacture the Xbox 360, which was originally released in November 2005.
Xbox Live revenue grew 22 percent during the quarter due to an increase in subscriptions and transactions, as well as a higher value per transactions, which seems to correlate with the shift to digital downloads we're seeing during this console generation.
The company said that in March, global hours spent on Xbox One increased 89 percent year-over-year. The company has however declined to provide hardware sales numbers in recent times, preferring to share "engagement" numbers. The last time we got a solid number for the Xbox One install base as in January, when EA CFO Blake Jorgensen pegged it at 19 million -- roughly half of Sony's PlayStation 4 install base at the time.
The company overall had a disappointing quarter, as it missed Wall Street estimates for its earnings. It generated $20.5 billion in revenue, but analysts were expecting $21.6 billion. Operating income hit $5.3 billion. Revenues also decreased year-on-year, down from $21.7 billion.