Xbox Series X/S sales drive jump in quarterly gaming revenue

Microsoft’s gaming business has reported a higher than expected increase in quarterly revenue following strong demand for Xbox Series X/S consoles.

On Tuesday the company announced its results for the fourth financial quarter ended June 30, 2021.

Having previously forecast revenue growth in the mid to high single digits, Microsoft reported quarterly gaming revenue up 11 percent ($357 million) year-over-year.

The growth was driven by increased demand for Xbox hardware, offset in part by a decline in Xbox content and services.

Xbox hardware revenue jumped 172% due to the higher price and volume of consoles sold following the Xbox Series X/S launches in November 2020.

During Microsoft’s quarterly earnings call on Tuesday, CEO Satya Nadella said Xbox Series X/S are the company’s “fastest selling consoles ever” and that Xbox Games Pass is “growing rapidly”, with subscribers playing approximately 40 percent more games and spending 50 percent more than non-members.

Despite reporting growth in Xbox Game Pass subscriptions and first-party titles, Microsoft said overall gaming content and services revenue was down four percent ($128 million) year-over-year.

This was due to the relatively weak performance of third-party titles, which had been particularly strong a year earlier following stay-at-home guidelines related to Covid-19.

During Microsoft’s earnings call, CFO Amy Hood also provided an outlook on its gaming business for the current quarter ending on September 30, 2021.

“In gaming, we expect revenue growth in the low double digits,” she said. “Console growth will again be constrained by supply.

“On a strong prior year comparable, Xbox content and services revenue should grow low single digits.”

Xbox Series X/S was the highest grossing hardware platform in the US in June, according to the latest report from the NPD Group.

June’s dollar sales of Xbox consoles set a new record for Microsoft’s gaming platform, beating the previous high set in 2011, the market research firm said.

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