According to Microsoft’s third-quarter earnings report released today, Xbox revenues have decreased by $306 million when compared to the same period in the previous year. The company has also revealed that their Computing and Gaming hardware division overall has suffered a 4% reduction due to unfavorable currency comparisons.
However, this isn’t the primary reason for the Xbox revenue reductions: it’s actually due to a 20% volume decline and a price reduction to the Xbox One, which has seen the Redmond company taking in less money per unit sold. So sorry Sony fanboys, it’s not a sign that the Xbox One is failing. Quite the opposite: recent price drops have been accompanied by huge sales spikes, and over the Christmas period last year, Xbox One overtook Sony’s latest console in terms of units sold.
When the Xbox One was first launched it had a $499 price tag, which was a deterrent for some. Since then, the publisher has offered more promotions (usually bundled with games) to attempt to draw in more customers and compete with Sony’s PlayStation 4 (which launched at the price of $399). It was also noted, in the report, that Xbox Live usage has increased by 30% “driven by increased users and deeper user engagement.”
Xbox 360 versus Xbox One sales weren’t mentioned in the report, so we can only speculate as to whether or not decreased 360 sales are also responsible for the Xbox revenue reductions – but it seems a likely bet.
Microsoft as a whole reported a 6% increase in revenue, totalling $21.7 billion. However, operating income and earnings per share were down by 5% and 10% respectively. The highlight for the company was its cloud services business, now known and advertised as Azure. Kevin Turner, chief operating officer at Microsoft, stated that “Around the world we’re seeing high interest in deployment of our cloud and server products, as well as participation in the enterprise early adopter program for Windows 10”.
With the recent news that Sony has overtaken Microsoft to become the 2nd biggest gaming company in the world, this is a very important year for Microsoft if they want to compete with Sony’s PS4.
All eyes on E3, then, as Microsoft has already confirmed that it will be putting out all the stops this year.