Microsoft Expects Gaming Revenue to Decline, According to Latest Earnings Call
With the release of its Fiscal Year 2025 Q4 financial report on July 30, Microsoft has unveiled some significant insights into its gaming division, particularly through an earnings call transcript that sheds light on future expectations. Despite a positive track record, the corporation foresees a downturn in its gaming endeavors.
Amy Hood, Microsoft’s chief financial officer, indicated in the earnings call that the gaming division’s revenue is projected to experience a decline. “We expect revenue to decline in the mid to high single digits,” Hood stated. This anticipated downturn includes Xbox content and services, which are also expected to fall by mid-single digits.
This prediction follows a period of growth for Microsoft’s Gaming revenue, which saw a 10% increase. In parallel, revenue from Xbox content and services rose by 13%. However, these positive outcomes were overshadowed by a significant hit to Xbox hardware sales, diving 22% in revenue this quarter.
Coinciding with these financial outcomes, the quarter witnessed the launch of several major gaming titles, such as “DOOM: The Dark Ages,” “Clair Obscur: Expedition 33,” “The Elder Scrolls IV: Oblivion Remastered” and “South of Midnight.”
In the transcript, Microsoft’s CEO, Satya Nadella, highlighted the company’s robust lineup, stating that they currently have “nearly 40 games in development.” Additionally, he shared a striking milestone, revealing that over 500 million hours of gameplay have been streamed via Cloud this year, underscoring the platform’s flourishing engagement.
The conversation further touched upon the ongoing success of iconic franchises like Call of Duty and Minecraft, both of which continue their growth trajectory. Equally noteworthy was Microsoft’s revelation about its subscription service, the Xbox Game Pass, which has reached “nearly $5 billion” in revenue for the first time. Hood characterized this as “better-than-expected performance.”
These insights provide a nuanced perspective on Microsoft’s strategic forecasts and market dynamics moving forward. With strategies in place and ambitions to enhance user engagement and gaming offerings, the company aims to navigate the projected decline while capitalizing on its existing successes.
