Microsoft presented its financial report for the financial quarter that ended on December 31, 2019. It reported that the revenue generated by Xbox, its gaming division, had an annual decline. That said, the reality is that the company still remains calm by putting these figures into context.
According to Microsoft’s financial report, Xbox revenues decreased by 21% compared to the same period of 2018. It is worth mentioning that this figure takes into account the money that was generated from both sales of software, hardware and subscription money. Later, Microsoft specified that the sale of software and services also decreased by 11%.
If all the metrics go down, why do we say that Microsoft still remains calm in this situation? First, because Microsoft made it clear that the drop in software revenue is because last year this metric soared thanks to a third-party game. While Microsoft did not specify what it is, analysts believe that it could be Fortnite (which did not have the same impact this year) or Red Dead Redemption 2, a title that was a success in sales at its launch on consoles.
Now, another important point is that Microsoft says the revenue drop was not that strong thanks to the growth of its subscription services such as Xbox LIVE Gold and Xbox Game Pass. In fact, it was mentioned that the number of Xbox Game Pass subscribers doubled in this quarter of 2019. Although it did not give figures on numbers of users or money generated by these services, its growth is the key for Microsoft, since they turn out to be the central part of its present and future strategy.
Another point to consider is that a new generation of consoles will arrive in 2020. With this in mind, it is normal for Xbox One, Xbox One S and Xbox One X sales to go down.
Finally, it should be noted that in this quarter Microsoft achieved total revenues of $36.9 billion. This is a figure that represents an annual growth of 14% and presents a net income of $11.6 billion. So, it is clear that Microsoft is in a good moment.