Microsoft’s Q3 earnings release shows that its game business is still on the rise in terms of revenue, but that income generated by hardware has taken a significant year-over-year hit.
Game-related revenue increased by $112 million year-over-year, a 5 percent increase, and came in at $2.36 billion for the quarter. Microsoft notes that it’s an increase driven by software (particularly third-party titles) and subscriptions however, not hardware.
Revenue generated by the sale of Xbox consoles fell 33 percent from the same period last year, a hefty fall Microsoft chalks up to “a decrease in volume of consoles sold.”
Revenue from software and services rose by 12 percent during that same period.
It’s worth noting that it's not surprising to see console sales take a hit this far into a generation’s lifespan (and as rumors of next-generation announcements loom), but a 33 percent decrease in console-generated revenue is a sizable fall.
The company as a whole brought in $30.6 billion in revenue during the quarter, a 14 percent increase from the quarter year-over-year, while operating income increased by 25 percent to $10.3 billion for the quarter ended March 31, 2019.