Xbox console sales fall another 30% as Microsoft moves forward

Microsoft just announced in new filings and its earnings call on Thursday that once again, Xbox console sales are down about 30%, after already being down 30% in April. Microsoft has been well behind competitors Sony and Nintendo for years in terms of hardware sales, and it’s now clear that it simply wants to transform itself into a completely different type of gaming company.

Microsoft’s hardware declines this time around were driven by “a decline in the volume of consoles sold,” as the earnings call relays, a repeat of a similar statement from April that featured an almost identical decline.

Microsoft will continue to make hardware. This won’t just… stop. But that makes it a less and less important part of its business over time. It’s not shocking to see these numbers drop because with each new decision, Microsoft makes it less and less necessary to own its hardware to play its games. To a certain extent, it is at least somewhat close to becoming a third-party publisher.

The fact is that Microsoft’s gaming division is not collapsing. Revenue is up, and in this report, Xbox broke records for game streaming hours, console usage, and monthly active devices playing its games. Over the past week, Microsoft has had more games on the PlayStation Store’s top 25 most-played titles than PlayStation games, which includes the recent surge of interest in the now-Microsoft-owned Fallout games Call of Duty and recent ports. like Sea of ​​Thieves. Gaming revenue is up 51%, Xbox content and services 62%, although it’s worth noting that all of these increases and records are hugely impacted by the Activision Blizzard acquisition.

The future is uncertain. Microsoft will continue to make hardware, but it will never return to its old sales levels compared to its competitors, because Microsoft frankly doesn’t care. Or at least that’s what they say publicly. Game Pass is fast approaching the subscription cap, if it hasn’t already. Microsoft is also leaning heavily on game streaming as the future, which remains a tiny part of the market and far from the best way to play most games. There are a lot of challenges ahead, and I’m not sure that simply opening up one’s IP to other platforms does much in the grand scheme of things.

I think they needed to pivot though. Those console sales weren’t coming back and they were trying to scale their gaming ambitions without completely abandoning the hardware. Sony, meanwhile, remains locked into its large-scale games released only within its console ecosystem or rarely on PC, whether only for multiplayer titles like Helldivers or years later for its single-player games. That’s its own kind of struggle, especially with gaming budgets exploding. And it can’t compete with the value of Game Pass right now and has few streaming ambitions. Its hardware investment in things like PSVR2 and PlayStation Portal has also been questionable.

The market is going through a really interesting time and both companies have challenges ahead.

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