Microsoft released the financial report for the last quarter of the fiscal year 2026. Although the company is making profits, it is incurring losses in the gaming sector when looking closely at the Xbox numbers.
How high are the losses for Xbox? If you look at all areas of the financial report from Microsoft, you will find losses in every corner of the Xbox area. Overall, revenue decreased by $1.7 billion or 7% compared to the previous year. This is due to several factors:
- Revenue from Xbox content and services fell by 10%.
- Revenue from Xbox hardware dropped by 13%.
- During the wave of layoffs, several severance payments had to be made. The reset program cost a total of $500 million.
Compared to previous years, Xbox seems to have been hit a bit harder this time. In the first, second, and third quarters of fiscal year 2026, the loss in the area of content and services never exceeded 7%.
Xbox is set to get back on track
Why are there losses? One main reason is said to be the strong first-party lineup in the previous year. In the previous year, titles like Doom: The Dark Ages, Oblivion Remastered, and Indiana Jones and the Great Circle were released. This year, fewer first-party titles were released, including Forza Horizon 6. This explains the losses in content and services.
How bad are the losses? According to CFO Amy Wood, such losses were anticipated. She even provides a forecast for the next quarter, stating that revenue from content and services is expected to continue to decline. Hardware sales are also expected to decrease further:
In the area of Xbox content and services, we expect a decline in revenue in the mid-single digits. Hardware revenue is expected to decrease compared to the previous year.
(Source: Earnings Call Transcript on microsoft.com)
However, Microsoft CEO Satya Nadella remains optimistic. He defends the restructuring and emphasizes the strength of the Xbox studios. He announces that the business is expected to grow again in fiscal year 2027:
Regarding Xbox, we are currently making the necessary decisions regarding our content portfolio, our platform, and our operations to realign the business and ensure long-term growth. We have the best IPs in the industry and talented studios around the world, and we are confident that we can leverage these strengths and get the business back on a growth path in fiscal year 2027.
(Source: Earnings Call Transcript on microsoft.com)
Accordingly, the company seems confident that the current restructuring efforts will yield long-term benefits.
What do you think about the losses? Do you think they were predictable? Feel free to write it in the comments.
Our MeinMMO demon Cortyn sees the situation a bit skeptically. Accordingly, the Xbox Game Pass, the largest gaming subscription model, is on the brink of failure and there is no solution in sight. The reasons for this are the missed target audience and the wrong game offerings: The Xbox Game Pass has failed and there is no solution
Your opinion is important to us!
Do you like the article? Then let us know!