Makes sense. Hopefully Xbox does have a plan between Cloud Gaming, Xbox Full Screen, and the deal for hardware production (consoles) to get products out there and reach customers. I think they expected a decline due to “macro economic conditions” and the economy is umm… doing stuff right now. 2026 is the big two five for Xbox (and three five for Blizzard and I think four zero for Bethesda) so ideally they have a plan in place to deal with everything and have a strong run.
This is within their guidance, though at the high end. Last quarter, they were up 1% when they expected to be down; it didn’t happen this time.
Article is updated with quotes for their guidance on next quarter.
CoD got real competition with Battlefield and Arc Raiders and itself was a rather middling release so this checks out.
Typically the content and services are driven by the Top 10/15 evergreen and blackhole titles. Naturally COD is one of those, but it’s not the entire driver. Fortnite is usually the big driver. The one quarter when Fortnite had a slower showing everyone dropped several percentage points on their revenue, including Sony. Roblox is another driver.
Not saying it’s a direct cause, but also during this past Holiday shopping season the local news had stories about Roblox and Pedos multiple times a week for months on end; mostly about how every parent should absolutely uninstall it from their childrens’ devices.
I am curious though on possible displacement of Fortnite spending with GamePass Ultimate benefits.
Yeah, something I always find interesting is how any decline in a business worth tens of billions means a hundred headlines reading “is XYZ DEAAAAD.” Kinda just… what is it? Do we want these companies to infinitely grow or not. Are monopolies good or bad. I think the larger hardware declines paint a bigger picture & shift, but single digit declines “eh”.
Bless their hearts (because I know the algorithm and nature of the internet demands it) but I saw a Windows Central article a few days ago going like how “Oh no, Windows installs are down again. Are people finally fed up and done with windows??” I mean shouldn’t that type of news be celebrated by consumers? I don’t dislike windows but they are by FAR the majority PC operating system. It’s even worse for gaming only. It’s like Google where the market share Microsoft controls in the space is so high that it’s just barely not a monopoly. If Windows wasn’t as open as it is then it’d be a nightmare. So like, what does it really mean when the headlines keep acting like Windows can’t lose the slightest market share without apparently completely dying off? I get that Microsoft as a business should want every single person on Earth to only use windows, but do we? It’s a tangent, but I really start to wonder.
Their 2025 was rough software wise, all their games except Oblivion flopped, and now that their console sales are falling hard, they can’t afford to have that many flops anymore.
The good thing is that this year, their lineup looks very solid, pretty sure this will be the year where they sell the most games ever from their studios, next quarter looks like it’ll be down aswell but the ones after that should only get better and better.
Mid term they have stuff to worry about, with Xbox sales ending, they will start losing more and more money from Gamepass and the console pay to play online subs, also peripherics etc.
The idea of releasing a new, powerful HW early should be dead or on hold now, no way a company can afford releasing gaming hardware with new tech, even more if the company is MS, who is obsessed with spending every dollar on AI stuff, i think they are going to have to focus very hard on being successful with their future game releases, my faith is on SoD3 becoming viral too, the world needs a more casual take on Dayz.
Bit Offtopic but i think Sony will be lucky with this AI thing, their stock has been down hard lately but if they are able to extend PS5’s life by like 2 years with no competition from other consoles or PC’s, that should be free money in the mid run
it’s over
The problem is Microsoft is done selling Xbox Series hardware. The next gen Xbox is just a PC in a console format. Once they release the next generation hardware they won’t report any Xbox Series decline because they will officially stop selling it. The games are an issue and gamepass being $30 isn’t helping.
I don’t think game quality is the issue but the marketing for their games is. I feel they don’t fully understand how to market their games and can’t read the room . I think the best example of that is outer worlds 2. It’s an excellent game but pricing it $80 instead of $50 or $60 was a mistake . I think that game needed a cheaper entry price at launch due to the reputation with the franchise
Well put. This year should be really good for Xbox studios and hopefully with more Series consoles in production hardware sales will be much better
I think the price rise to Game Pass hurt really hard and it didn’t help that this year’s COD was so below par.
The Gamepass Ultimate price hike probably plays a role here as well. $30 is steep, especially when the added value was basically Ubisoft’s old catalogue sans the new releases. A few casual players would have cancelled for sure.
I still consider Xbox to ironically be the best place to game but it’s maddening how execs disrespect their own product. The Series X is a better games console than the PS5 and I don’t want to go PC because it’s absolutely not an Eldorado (& MS could step on a rake here as well with how PC gaming is about to hit a brick wall due to home computers bearing the full brunt of AI causing hardware costs to explode).
Not shocking, they probably lost a ton of Game Pass subscribers due to the insane price increase, they did an insane price increase on hardware and COD had a down year, now hopefully Microsoft doesn’t lay off a ton of innocent employees due to their own bad decisions.
Their guidance is for Game Pass growth to offset a lack of first-party releases and hardware sales next quarter.
I 100% agree with this. Xbox marketing their games and gamepass has been a thorn since the Xbox One. It’s funny how you mentioned the $80 price tag and how Outer Worlds 2 should have been $50-60 dollars. I was checking out the PlayStation Store I noticed that both versions of Avowed are selling more on the preorder best selling list than both versions of Saros which is PlayStation 1st party game. I think Avowed is going to do better than Outer Worlds 2 overall.
This entire down quarter begins and ends with Call of Duty: Black Ops 7 vs 6. I’m not surre why everyone is jumping to other parts of the business so quickly.
Well said, still Amy knows best
Again, there is nothing in their guidance or responses about Game Pass losing customers. They grew on Cloud, they grew on PC, they lost money YoY because of COD’s lack of success. That will continue throughout the year as BO7 makes far less money than BO6.