Microsoft's games business saw a 13 per cent decline in revenue year-on-year for its most recent quarter.

That's according to the firm's financial release for the three months ending December 31st, which show that the company made $4.758 billion from its games arm, down from a previous $5.442 billion. Microsoft blames this on a decline in first-party content and making less money from third-party games. Xbox hardware saw a 13 per cent dip in revenue, too, due to price reductions and fewer consoles sold.

Speaking to investors, CEO Satya Nadella claimed it wasn't all bad news.

"We saw new highs for Game Pass subscriptions, game streaming hours, and monthly active devices, and monthly active users surpassed a record 120 million during the quarter," he said.

"We continue to invest to add value to Game Pass. This quarter, we partnered with Riot Games to make the company's PC and mobile games, along with premium content available to subscribers."

This comes on the back of Microsoft making around 10,000 people redundant, cuts that also affect its games division.