Microsoft released its quarterly earnings report for the quarter ended June 30, 2022 showing a drop in game revenue of $259 million (7%).
This result is consistent with Microsoft’s previous forecast. Xbox hardware revenue fell 11% and Xbox content and services revenue fell 6%.
Microsoft said the drop was mainly due to lower player hours and lower first- and third-party in-game spending, which was partially offset by growth by Xbox.
Microsoft says the drop in Xbox hardware is partly due to supply constraints, even though the console has been on sale for more than two years. But Microsoft also said it still sees strong demand.
According to market analyst DomsPlaying, Xbox’s $3.45 billion gaming revenue for the quarter was Microsoft’s second best-ever quarter.
Microsoft said last month that it still plans to release at least five first-party games next year. As of now, two of its games are confirmed to be released in Microsoft’s current financial year.
Microsoft’s chief financial officer, Amy Hood, said on an analyst call that the results do not include anything from Activision Blizzard, which Microsoft is in the process of acquiring for $68.5 billion. He said he still expects that deal to close in the current financial year. Hood said revenue from the game was in line with expectations.
PC division revenue grew 1% to 4% in constant currency, or $13 billion to $13.4 billion. The game is expected to drop from low to medium, due to the drop in title launches. That will be offset by growth in Xbox Game Pass, Hood said.
To recap, Microsoft generated $198.3 billion in fiscal year 2022, up 18% year-on-year. Full-year operating revenue reached $83.4 billion, up 18%.
+ Microsoft Cloud posted revenue of $25 billion in the quarter, up 28% year-on-year.+ The PC segment, which includes Xbox, posted revenue of $14.4 billion in the quarter+ Xbox content and services reported a decline 6% vs. 2021.+ Game revenue fell by $259 million in fiscal year 2022, a 7% drop from the same period last year.