Xbox revenue drops 10 percent as Microsoft’s cloud and AI business surges — SkimNews
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- Xbox content and services revenue dropped 10% while hardware sales declined 13%, per Microsoft's Q4 earnings report released Wednesday.
- Microsoft Cloud revenue surged 27% to $59.3 billion, pushing overall company revenue to $90 billion as Azure crossed $100 billion for the first time.
- Microsoft 365 Copilot reached more than 30 million paid seats, underscoring the company's AI productivity momentum amid Xbox's decline.
- Xbox head Asha Sharma recently announced a "reset" plan including layoffs and spinoffs of four game studios, including South of Midnight developer Compulsion Games and Psychonauts creator Double Fine Productions.
- Xbox is lowering Game Pass prices, testing ad-supported cloud gaming, making Gears of War: E-Day and Clockwork Revolution Xbox exclusives, and raising console prices by $100+ starting August 1.
- Satya Nadella said Microsoft expects to "return the business to growth in fiscal 2027," framing the Xbox restructuring as necessary for long-term recovery.
- Microsoft's Windows OEM and devices segment fell 7% driven by lower PC market demand, even as the company unveiled a new Surface device with Nvidia's Arm-based RTX Spark processor in June.
Why it matters: Gamers face $100+ Xbox console price hikes starting August 1 alongside double-digit content declines, while Microsoft's $90 billion quarter shows the company pivoting decisively toward AI and cloud. Nadella's pledge to return Xbox to growth by fiscal 2027 signals two more years of restructuring ahead for the gaming division.
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