Xbox Series X/S Doing "Much Better Than Expected"

While console gamers are still struggling to get a hold of new gen hardware such as the Xbox Series X or PS5, this does not mean console manufactuers are not generating revenue off the ones that are being sold. For Microsoft, it appears they are doing fairly well.

The Redmond giant and makers of Windows has released its financial results for the first quarter of its current fiscal year (the three months up to September 30, 2021). They show Xbox hardware revenues were up 166 percent compared to the same period last year, which might not come as a surprise since Xbox One sales were tailing off.

Gaming revenues grew 16 percent overall, but Xbox's content and services revenue increased only two percent. While Xbox Game Pass subscriptions grew the company was disappointed at not reaching its target. First-party title sales grew but this was offset by declining third-party title sales.

The Xbox Series X continues to be in short supply relative to demand. While the PS5 might be even rarer than Microsoft's new gen console, Xbox fans are still having trouble securing a Series X. The smaller, less powerful Series S seems to fare a touch better than its X sibling.

But chief financial officer Amy Hood told investors during an earnings call that Microsoft was able to ship "more Xbox Series X and S consoles than expected, even as demand continues to exceed supply."

Both Sony and Microsoft have struggled to manufacture more of their latest consoles due to a global computer chip shortage, a pandemic-related shortage that has affected other industries including automobiles. Xbox boss Phil Spencer has said this manufacturing issue could very well extend into 2022.

The pandemic has caused first-party titles to be delayed, which may have contributed to Microsoft missing its growth targets for Xbox Game Pass subscriptions for the previous financial year (ended June 30, 2021). In comparison Xbox content and services revenue grew by 30 percent over the same period last year, very likely driven by pandemic-induced lockdowns which drove people to seek out more indoor entertainment.

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