Xbox Is Killing It Right Now

Xbox Is Killing It Right Now
Xbox Series S (Image: Microsoft)

Under normal circumstances, any company that launches a relatively successful console with a strong software services play is liable to have a good quarter. And when you’re Microsoft, and that services play is the very good Xbox Game Pass, and you’ve got COVID-19 limiting supply and encouraging more people worldwide to stay inside and game, things will naturally look great for Xbox.

The launch of any new console generation is generally going to cause its maker to enjoy a better-than-normal quarter. And early Wednesday morning Australian time, Microsoft confirmed the obvious: Xbox revenue is way up.

Almost double, in fact. The launch of the Xbox Series X and S saw Microsoft’s hardware revenue — that’s money made from controllers, consoles and the like — soared by 86 per cent. Content and services did well too, growing by 40 per cent for the quarter “driven by strength from third-party titles, Xbox Game Pass subscriptions and first-party titles,” Microsoft said.

Image: Microsoft Investor Relations

There’s really not much in the quarter that wasn’t good news for Microsoft, really. Outside of Xbox, Microsoft’s commercial cloud revenue grew to $US16.7 billion. Microsoft as a whole made $US43.1 billion in revenue for the quarter with $US15.5 billion net income, which just highlights how large a behemoth Microsoft still is. Remember: Microsoft’s Azure business is now bigger than Windows itself.

It’s expected that Microsoft’s gaming revenue should continue growing over the coming quarters, too. With the increased demand for gaming and the supply limits on the next-gen consoles, corporate America (and everywhere else) is expecting higher-than-normal sales of consoles over the next year. AMD — whose investor call is live as I’m writing this — confirmed as much to their own investors, who are naturally just as happy with the massive increase in demand for the Xbox Series X and S.

“Our [first quarter] guidance is better than normal seasonality, we normally see the first half weaker than the second half given than the second bend — the shape from a market standpoint, we see PCs and gaming better than seasonal, there’s some pent up demand,” AMD CEO Dr Lisa Su said when asked about demand for AMD’s semi-custom business, which supplies the SOCs that power the next-gen Xbox and PlayStation 5 consoles.


        • Hopefully EA.

          I did see in the news a Chinese company was making moves to potentially do a hostile takeover. Whilst I have no love for EA I worry about the IP and privacy that gets lost.

          • Tencent trying to pacman its way thru the industry. Its a time of pretty crazy consolidation in the industry to be fair, although if I’m going to see IP’s pacman’d, I’d prefer it doesn’t get ingested into Tencent.

          • I honestly don’t care is MS gobbled EA and made everything exclusive.
            As long as Tencent or some other pos company doesn’t get it.
            At least we would get decent games

      • I would think they will want to see a return on the investment itself before they drop that kind cash again.

        Who knows though, it could’ve been the first step in a larger move.

    • Yip laughing all the way to the bank. Best by ever. Suspect we have seen nothing yet. Playing hellblade on xcloud…watch this space.

  • Yip laughing all the way to the bank. Best by ever. Suspect we have seen nothing yet. Playing hellblade on xcloud…watch this space.

  • I’ve always stuck with Sony but this gen I actually sold my ps5 (for what I paid for it) and kept the series x. Just wasn’t a good reason to hang onto it. I’ll probably pick one up again next year once some killer titles release but the series x with game pass has everything I need.

  • It’s been very interesting watching the life of Game Pass. They’ve managed to take a concept that wasn’t particularly welcome and position themselves as something that’s growing into gaming’s Netflix/Spotify. It’s still not for me but it’s definitely starting to connect with an audience that appreciates it.

    The idea of a Steam killer is a joke on a ton of levels, but I think we might actually be looking at Microsoft’s PC beachhead. If you’ve already got people playing the next Fallout on their consoles, what happens if you point at their PC and say ‘it’s unlocked and ready to install, and it can handle mods’? I don’t think Game Pass players are great candidates for converting to PC gamers but they could be the mythical ‘using the platform by choice’ gamers that have eluded the major industry players for years.

    It’s also interesting to see Microsoft not ruin a good thing. This has been slowly building over a few years which is typically enough time for Microsoft to get nervous and derail themselves. They seem to have had a clear vision of what they wanted Game Pass to be and they stuck with it.

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