Xbox services and content offsets hardware decline at Microsoft

Xbox services and content offsets hardware decline at Microsoft

Microsoft's games business has seen continued growth, with revenue increasing by 22 per cent year-on-year for the three months ending September 30th, 2020.

According to the company's 10-K form, this division brought in $3.1bn for the quarter, an increase on the $2.5bn for the previous year. This $550m rise in revenue was driven by Xbox content and services, which saw a $649m increase year-on-year and offset the 27 per cent decline in hardware sales as the current console generation comes to a close.

Gaming is the Big M's fourth highest-earning business segment, with Microsoft's cloud computing arm bringing in a cool $11.2bn.

"Our Xbox Game Pass service has more than 15 million subscribers," Microsoft boss Satya Nadella (pictured) told investors, as reported by Seeking Alpha.

"Quality differentiated content is the flywheel behind the service’s growth, and the addition of EA Play next month, along with our pending acquisition of ZeniMax Media, will add more of the world’s most iconic franchises to the more than 100 high-quality games already available and materially increases our ability to increase content. We’re also transforming how games are distributed and played, and reaching new players on mobile and tablet, by bringing cloud gaming to Game Pass."

Xbox Game Pass hitting 15m subscribers was announced back in September and constitutes a 50 per cent increase since April. Microsoft's pending acquisition of ZeniMax Media, the parent company of Elder Scrolls firm Bethesda, was announced last month. Xbox boss Phil Spencer has said that this won't result in forthcoming titles from that firm being exclusive to Microsoft's ecosystem.

PCGamesInsider Contributing Editor

Alex Calvin is a freelance journalist who writes about the business of games. He started out at UK trade paper MCV in 2013 and left as deputy editor over three years later. In June 2017, he joined Steel Media as the editor for new site In October 2019 he left this full-time position at the company but still contributes to the site on a daily basis. He has also written for, VGC, Games London, The Observer/Guardian and Esquire UK.