Earnings report shows rising Microsoft Gaming revenue despite declining Xbox console sales
Xbox Gaming banner (Image source: Microsoft Gaming with edits)
Microsoft Gaming is earning more than a year ago, even with falling console sales. Profits from subscription services and multi-platform titles led to a positive financial report. Microsoft may change strategies again, with several rumored Xbox consoles in development.
As Q1 2025 sales data comes into focus, Microsoft Gaming is the latest company to post an earnings report. Revenue grew by 5% from January to March compared to the same period in 2024. However, impacted by slow Xbox console sales, hardware sales fell by 6%. The numbers reflect a reliance on Xbox Game Pass, cloud gaming, and cross-platform publishing.
Sadly for Xbox Series X|S owners, there are now limited exclusive benefits to using the console. Former Xbox exclusives like Forza Horizon 5 have found their way to Sony's PS5. While games like Indiana Jones and the Great Circle launched on Xbox and PCs, it's also available on the PlayStation. Meanwhile, Xbox Cloud Gaming has floated its way onto more mobile devices and Smart TVs.
Microsoft Gaming Q12025 earnings report (Image source: XboxEra)
According to updated VGChartz charts, the gap between PS5 and Xbox console sales continues to expand. Over the past year, 2.97 million more of Sony's consoles were sold than the Series X|S. Both companies will likely struggle to compete with Nintendo's upcoming Switch 2.
Hardware sales across the entire gaming industry are also falling in the US. Fortunately for Microsoft, software and subscriptions are less impacted. An 8% increase in Microsoft's digital services helped to compensate for profits lost due to shifting strategies. The Play Anywhere campaign entices gamers to experience Xbox Game Pass titles like Call of Duty on existing gaming systems.
Microsoft Gaming may only be pausing its interest in hardware. Although Project Kennan would be an Asus-made handheld, it could feature an Xbox UI and controls. CEO Phil Spencer has also reassured fans that the company is still interested in developing gaming systems. Rumors hint that a new Windows-based Xbox console could arrive in 2027 or 2028. Other recent leaks involve three different Xbox controllers that include cloud gaming connectivity.
Adam Corsetti - Tech Writer - 379 articles published on Notebookcheck since 2025
I became interested in technology at a young age and enjoyed discovering the latest innovations. While earning college degrees in publishing, I created several PC hardware and gaming websites. My passion has always been to guide readers on what products can truly improve their lives. After many years as a Tech Writer for Game Rant, I'm anxious to share my knowledge with a new audience at Notebookcheck.
