Xbox FY22 Q2 gaming revenue up 8% thanks to first-party games, Xbox Game Pass

Xbox Series X, Xbox Series S
Xbox Series X, Xbox Series S (Image credit: Matt Brown | Windows Central)

What you need to know

  • Microsoft has reported its FY22 Q2 earnings, with gaming revenue up 8% year-over-year.
  • Xbox content and services revenue increased 10% year-over-year, driven by growth in Xbox first-party titles and Xbox Game Pass.
  • Demand for Xbox Series X|S consoles saw Xbox hardware revenue grow 4% year-over-year.

Microsoft shared (opens in new tab) its FY22 Q2 earnings report on Tuesday, giving details on growth for the Xbox brand. Overall, gaming revenue was up 8% year-over-year, while content and services revenue was up 10% and hardware was up 4%. This growth was driven by Xbox first-party titles, Xbox Game Pass and demand for Xbox Series X and Xbox Series S consoles, though partially offset by a decline in third-party revenue.

This decline in third-party revenue can be partly attributed to the underperformance of major third-party titles, such as Activision's Call of Duty: Vanguard and EA's Battlefield 2042. The success of Xbox first-party games can be noted in Halo Infinite and Forza Horizon 5, which charted at #2 and #16 on the December 2021 NPD report, respectively.

Microsoft recently shared that Xbox Game Pass has reached over 25 million subscribers. All of this growth is directly compared to Microsoft's FY21 Q2 earnings a year ago. This is in line with continued growth seen in the prior quarter ahead of the holiday 2021 season, per Microsoft's FY22 Q1 earnings.

Looking ahead, Microsoft continues to invest heavily in new content for Xbox, including expanding its first-party lineup. Microsoft is acquiring Activision Blizzard for $68.7 billion, adding teams like Infinity Ward and Blizzard Entertainment to the Xbox first-party group, while also acquiring major gaming IP such as Call of Duty and World of Warcraft. This is in addition to Microsoft's prior acquisition of ZeniMax Media, parent company of Bethesda Softworks, for $7.5 billion.

Samuel Tolbert is a freelance writer covering gaming news, previews, reviews, interviews and different aspects of the gaming industry, specifically focusing on Xbox and PC gaming on Windows Central. You can find him on Twitter @SamuelTolbert.

  • Acquisitions take time to significantly impact sales.
    Bethesda will really *start* to contribute this summer (Redfall), a yeat after closing the deal.
    Activision will probably start in late 2023, but the impact of the dormant IPs won't be felt until 2025-26.
    Now, Gamepass is a different story.
    When COD 2023 hits Gamepass and Series S is when things get interesting in the console space.
  • Agreed, both ZeniMax Media and ABK have been long-term plays. Phil and Satya are clearly looking to the future.
  • I wonder if they will ever release unit sales of Xbox. If they are still being outsold 2:1 by Sony I don't think it would hurt their media coverage if their overall revenue is doing so well. I think it hurts more to constantly avoid releasing the numbers. Obviously they would boast about unit sales if they were outselling Sony so I don't believe it when they say they don't care about unit sales.
  • They won't, because they don't care if you own a console, they just care if you have Game Pass.
  • Bingo. If you are a Game Pass player you don't need the plastic, but they will gladly sell it to you.
  • Beautifully said and I totally agree.
    Our kids nowadays hardly use consoles and for crying out loud we have 4 of them, They just game pass on their PC and mostly on the phones.
    A quick question, Will this have potential to kill XBOX console? or maybe better question is will it reduce it sale a lot.?
  • Don't think so.
    MS correctly sees consoles as a nichd but it is a *big* niche and a flag bearer. (Think: CORVETTE or VIPER.) Or SURFACE. More, there's Series S.
    The biggest part of their cloud story is the living room. SmartTV apps, a dedicated streamer + Controller at $100, Series S/512 at $199.
    I think MS is planning for 100M Series S and 50M Series X, 80% of those on Gamepass. That is good money. The MS strategy looks to go way beyond console but they're not dropping console anytime soon. If nothing else, to ensure third party support for the ecosystem.
  • I don't think so, especially considering Xcloud blades are basically consoles. So as long as they have those blades, they will need to continue making console innovations. Also, even though there are really many reasons to not get the console anymore they are STILL selling more than ever before.
  • Sony isnt even their competition anymore. They grew past that years ago. Phil sees Sony PlayStation as a important part of the gaming industry. People need to step off from this simple fanboy thinking that not releasing numbers is hurting xbox, it is absolutely not when you can obviously see Microsoft wants to dominate with Game Pass and have Xbox everywhere you look on every platform. That is income from all directions than just hoping that console sales might do well for the year.
  • Yes, and remember: Sony is paying Microsoft for hosting in Azure 😎. Info:
  • They still comment on hardware revenue so they still care. They just cherry pick their numbers.
  • Yeah, but it isn't the goal. Obviously they want it to sell because it means they are growing and that means they will then sell more services.
  • They report against hardware revenue as they also report against the cost of hardware design, production and distribution. You need both sides to balance the books.
  • Correct.
    There's bigger fish to worry about in the gaming ocean.
    Amazon, Google, Netflix, Meta...all of which are dabbling in games and have the money for an Activision size buy. In fact word is out Apple has been hiring ex-Xbox engineers for a console.
    Considering Apple already has a gaming subscription full of casual games and s few tens of millions of Apple TVs that do games all they have to do is buy Ubisoft or Take2 to be an instant player. And their fans are even more rabid than Sony's. As far as MS is concerned, Sony is a solved problem.
    Their current moves are for 2025 but the console-obssessed media are ignoring all the signs and warnings from MS. By the time they notice the sharks will be out in force.
  • Don't forget that SONY has seen the writing on the wall themselves and are moving quickly into PC Game Sales and trying to come up with an answer to Game Pass.
    The SONY executives have been pouring cold water on the very idea of a PS6, and I doubt they will build one in the future.
    They seem to be trying to leverage their considerable market of (excellent, but pricey) TVs into a SONY GAME-PASS kind of marketplace. Creating a captive Game-Pass portal so people with SONY TVs can play their games directly on their SONY TV. No Console required. (Microsoft is also moving in that direction quickly, working with multiple TV manufacturers to make sure you can access MS Game-Pass Premium directly on your brand new big-screen TV (now that many support Dolby HDR, Dobly Sound, and VRR.)
    Sync up your Xbox controller with the TV and start playing. That is the endgame both companies are moving towards.
    They will still have consoles for the hard-core gamers, but it will no longer be the Cash-Cow it once was.
  • Sony *should* be focusing on Playstation TVs because in 2021 their TVs were far from the best place to play PS5. Even their high end models lagged the Koreans. PC? A bit late to the party and they're something of a one trick pony. They'll need the cash so yes, they need to be day and date on PC. No more year old retreads to placate the fen. Even on consoles they are caught in a trap of their own making by focusing their own studios so strongly on a handful of blockbusters, most of them in the same third person action format. And where the MS BIG studio buys have been focused on IP and expanding the range of first party games they can do Sony's buys are studios already working with them and adding PC porting help. Doesn't really expand their catalog and they are now caught in the same spot MS was last gen; overly dependent on third party games to fill out their release schedule between their 2-3 first party releases. As for Spartacus, it will do fine among the faithful, especially if it finally brings PS3 games along but unless they add day-and-date releases it won't go much further among the uncommitted *and* it will reduce sales among the faithful since so many of their first party games are one pass single narratives. Plus, they'll be starting practically from scratch--3-5M was the last known number of subscribers of their streaming tier. There's no telling where gamepass will be by the time they get to 20m (2024?). The challenge they face is today's gaming has five distinct segments and it's not just hardware based. There is the traditional single player console/pc segment and it's companion online coop or PvP console/pc game. Third is mobile casual gaming. Forth is the Software as a service on console/pc. Fifth is Free to play.
    So how many of those does Sony first party address?
    How about Nintendo?
    All are part of the global gaming market but only MS Gaming will be strong in all five segments by next spring.
    Mind you, there is a sixth *potential* segment (VR) but it is niche-ier than tbe niche-iest niche and doesn't generate money even at the Kinect level. Still, if it ever arrives, MS already has a foot in the door. (Skyrim). Sony has a tough climb, a lot of debt on tbe books, and only $16-20B cash on hand.
    Whatever they spend on will have to be strategic. And cheap.
    My suggestion would be Stadia.
  • It was reported that over 12 million Xbox Series X and S has been sold brotha. About 18 million PS5 have sold. It's not a 2 to 1 ratio.
  • By fall it'll be closer to 1:1. The numbers that matter, though, came out today: 20M Halo Infinite gamers, 18M Forza Horizon players.
    And 25M Gamepass subscribers.
    All as of Dec 2021.
    And Series S is just starting to take off.
  • If you consider Xbox vs Playstation, it's likely much more, The PS4 is still selling very well given that Sony haven't discontinued it. Whereas the Xbox One has not really sold at all outside of second hand.
    Just an estimate from a third party, with no official numbers from Microsoft.
  • Can't sell what you don't build. 😇
    Sony has the brand loyalty to sell a ton of PSs but MS has the better story for newcomers to gaming. Especially families. If you don't have a console and a big budget, what's the better buy: SS or PS4? Remembering it is PS4 lite that is being built (Hard Drive!). And remembering that 75% of TVs in living rooms are 1080P and LCDs have usable lifetimes in excess of 10 years. If you have a 1080P TV what's the vzlue of 4K? 40% worth of future proofing? Even 20% is a lot for "someday" features. Things look different on the ground than in a reviewer's den. Finally: we are already seeing SS at discount: $279-289 in the US, £234 in the UK.
    Also, the SS availability is approaching norm. Lots of little things add up.
  • That should be 18 Million SHIPPED. Not necessarily sold.
  • Sony's own report had them at 15M PS5s specifically, by March.
    Might 18M include last gen PS4s?
  • I read the headline as: "Xbox revenue up thanks to PARTY games" And I thought, man, people are really not careful at all about Covid.
  • Well, there has been a revival of interest in FUZION FRENZY.