What you need to know

  • Today, Microsoft reported its quarterly earnings.
  • Over the past three months, gaming revenue declined 7 percent.
  • Xbox content and services revenue stayed flat.
  • It'll be interesting to see if this changes during the busy Holiday 2019 period.

Updated October 24, 2019: In the earnings call, Microsoft said that it expects gaming revenue to decline by as much as 20 percent as the next-generation of consoles approaches. Despite this, the company said that Xbox Live user numbers were at a record high.

Today, Microsoft revealed its quarterly earnings report which revealed growth for a number of different divisions. A few weeks ago, the company announced that it would stop reporting Xbox Live member numbers and other statistics, and just focus on growth. Well, during the last quarter which ended on September 30, gaming revenue didn't exhibit any growth, but instead, decreased by 7 percent. Xbox content and services revenue stayed flat. Unfortunately, hardware revenue declined 34 percent.

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Microsoft warned investors that it expects console sales to decline as it moves towards Holiday 2020 when Project Scarlett is expected to launch. The company said the following in guidance from the previous quarter.

And in Gaming, we expect revenue to decline year over year at a similar rate... as we move through the end of this console generation and a challenging Xbox software and services comparable from a third-party title in the prior year... We expect revenue in our gaming business to be down slightly year over year as double-digit growth in Xbox Software and Services will be offset by declining console sales.

It'll be interesting to see if these numbers pick up because the holiday period is the busiest. However, consumers know that Project Scarlett is coming out in a year, so many potential buyers may want to wait for the new console.

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