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Microsoft’s Q2 FY2025: Gaming Revenue -7%, Hardware -29%, Content and Services +2%
- Thread starter adamsapple
- Start date
mayham2199
Member
It's obvious the latest interviews by Phil are to get people ready for the flood of games going multiplat. I suspect they might wait until Switch 2 releases so they can announce games for both at the same time.
ProtoByte
Weeb Underling
I do not believe PlayStation releases will save them. Their games have to be very good for that, and I don't think they have been or will be.
James Sawyer Ford
Member
Indiana Jones didn’t need to flop like it did
PlayStation simultaneous release and hype cycle would have done a ton to improve that game’s sales. Xbros better hope it does decently
Quality has not been there but future releases may improve
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mayham2199
Member
I think games like Halo, Gears, Indiana Jones will do well. Beyond that they better start making good games. Starfield will also do well I think.
FIREKNIGHT2029
Member
The hardware declines aren't stopping.
mayham2199
Member
Hilarious. Initially he tweeted that he wasn't going to report anymore on the earning call after the initial numbers came out.The hardware declines aren't stopping.
How much did halo and gears sell on Steam? Those franchises haven’t been relevant since the 360. They are relics from the past and a PlayStation release, despite the headlines it will bring, will not bring them back to the forefront. People simply have better games available to them now.
MS has no choice but to sell on PS5 going forward. But it is not an automatic win for them. They still have to make games worth buying. The market is more crowded than ever. The competition for players time is fierce.
mayham2199
Member
I'm not sure what they sold on Steam but I think they have a strong chance to do well on PS. Obviously it's no guarantee. I do agree it is no automatic win for them. This is the best time ever to be a platform holder and horrible time to be a developer. The gaming industry is flooded with not just good games but very good games.
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Damn!The hardware declines aren't stopping.
Declining from the 2024 numbers is crazy because it's coming to a crawl.
panda-zebra
Member
Sell less hardware, make less losses subsidising. It's a winning strategy!The hardware declines aren't stopping.
Ashamam
Member
Given gaming revenue is Hardware plus C&S I must be missing something as - 29% growth on hardware vs +2% on C&S still ends up with a net -7% across the board. Given the C&S is slightly inflated due to the acquisition not falling at the start of Q2 '24 (so C&S is actually likely negative) the weighting must fall really heavily in C&S favour.
ANIMAL1975
Member
Satella:
Phill:
The Xbox player engagement awards!
Phill:
The Xbox player engagement awards!
Woopah
Member
The stats come from Circana.
I think what
adamsapple
is say is that it doesn't make sense to compare Gamepass price increase % to content and services %. Because content and services also includes things like first party and third party software what he said
2% increase in revenue with a much higher increase in cost of the premium service (that delivers what game pass always promised to deliver) means the number of subs had to decrease, there's no way around it.
I would venture a guess in saying there was an actual increase on the premium subs, offset by a much larger decrease in lower tier service subs.
See above, we don't have the data to be able to say this.
All we know is that Gamepass was the primary driver of growth, but we don't know if it's just price or users and price. We don't know the Gamepass growth %, just content and services growth %.
Edit: Apparently Nadella just said the number of users on PC grew 30%. So that would mean overall user growth unless the number on console declined.
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Kacho
Gold Member
Xbox
jm89
Member
2026: 0 Xbox consoles soldThe hardware declines aren't stopping.
MS: we forecast further Xbox console declines for 2027
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Ashamam
Member
They bank 13 days of ABK revenue this year they didn't have last year, so it's a bit overstated in a sense but generally it's not terrible on the publisher side is my take. But being MS they could well see it as a pretty bad result in terms of targets. They may highlight the silver lining but these guys want the whole gold bar.
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balls of snow
Member
They gambled with cod blops 6 on gamepass and lost. Now they are hoping Ninty hits a homerun with Switch 2 because they are not porting ms flight sim for nothing.
Woopah
Member
Potentially yes, but we don't know for sure. So it could be that software revenue dropped but subscription revenue increased. I'd say that's likely what happened.
thicc_girls_are_teh_best
Member
So uh, they didn't really drop the price on Xbox hardware during that quarter, right? Because if so, and if Series X is making up most of the sales (say every 6 out of 10), then that'd be just ~ 1.2 million Series X units sold during that quarter.
Globally.
The Xbox Series is at EOL numbers.
Not really. It's statistically in the margin of error, and relatively flat all things considered. Game Pass sub counts must've retracted heavily if COD being there could only help bump up the revenue by 2%.
I mean that's not some random little indie game; it's COD. One of the biggest IP in gaming...but services revenue only grew 2% despite it being Day 1 in Game Pass? Kind of a poor showing.
Okay, TBF I didn't think of WoW or Battle.net or ESO services when I was just talking about Game Pass declines...but WOW for example I strongly doubt had drops as it's been on the up-and-up for a while. ESO I believe has been stable in players...Battle.net maybe has seen a bit of a drop but then again, games like COD and Overwatch 2 plus Diablo IV probably have somewhat more active player bases there vs. Steam.
Considering all of that, I can't help but picture the most likely reason content & services revenue was statistically flat (again it's just 2% growth, that's in a typical margin of error and could be wiped away next quarter) is because Game Pass sub counts saw a large decline, probably around the time of the price increase and some time gradually following it.
However since MS don't provide Game Pass sub updates anymore, it's hard to gauge what the hard numbers are. I do think if the numbers were better, we'd be hearing of them. After all, services is something they as a corporation are balls-deep in, and with something still in its infancy like subscription services-based gaming, if you want to be a market leader I'd think you would want to put out as much hard data proving your results as possible.
In this case, one of those being sub count updates. Companies like SIE and even Nintendo have no issue providing those types of numbers.
Globally.
The Xbox Series is at EOL numbers.
Not really. It's statistically in the margin of error, and relatively flat all things considered. Game Pass sub counts must've retracted heavily if COD being there could only help bump up the revenue by 2%.
I mean that's not some random little indie game; it's COD. One of the biggest IP in gaming...but services revenue only grew 2% despite it being Day 1 in Game Pass? Kind of a poor showing.
The stats come from Circana.
I think what
See above, we don't have the data to be able to say this.
All we know is that Gamepass was the primary driver of growth, but we don't know if it's just price or users and price. We don't know the Gamepass growth %, just content and services growth %.
Edit: Apparently Nadella just said the number of users on PC grew 30%. So that would mean overall user growth unless the number on console declined.
Okay, TBF I didn't think of WoW or Battle.net or ESO services when I was just talking about Game Pass declines...but WOW for example I strongly doubt had drops as it's been on the up-and-up for a while. ESO I believe has been stable in players...Battle.net maybe has seen a bit of a drop but then again, games like COD and Overwatch 2 plus Diablo IV probably have somewhat more active player bases there vs. Steam.
Considering all of that, I can't help but picture the most likely reason content & services revenue was statistically flat (again it's just 2% growth, that's in a typical margin of error and could be wiped away next quarter) is because Game Pass sub counts saw a large decline, probably around the time of the price increase and some time gradually following it.
However since MS don't provide Game Pass sub updates anymore, it's hard to gauge what the hard numbers are. I do think if the numbers were better, we'd be hearing of them. After all, services is something they as a corporation are balls-deep in, and with something still in its infancy like subscription services-based gaming, if you want to be a market leader I'd think you would want to put out as much hard data proving your results as possible.
In this case, one of those being sub count updates. Companies like SIE and even Nintendo have no issue providing those types of numbers.
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![[Sigma]](/data/avatars/m/701/701747.jpg?1726376545){kind=avatar}
panda-zebra
Member
Pssst.... the Xbox Series is at EOL.
digital_ghost
Gold Member
At least contetn is up
Topher
Identifies as young
I think what
Like I said to him, I think that is understood. What % GP increased is still a relevant question. What followed after that was simply speculation. At least that is how I read it.
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poppabk
Cheeks Spread for Digital Only Future
Right - but last year they had CoD revenue from game sales on Xbox and PC - a huge game as you say. This year they lost a lot of that sales revenue but are still marginally up overall meaning subs more than compensated from losing a huge chunk of PC and Xbox CoD sales.
Woopah
Member
See my posts above, but this figure tells us nothing about user numbers. Content and services contains way more than Gamepass.
Also what do you mean by "margin of error" in this context?
I'm not sure it's well understood at all. You have several posts here saying how 2% is a bad number for Gamepass or how there was no growth in subs.
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ProtoByte
Weeb Underling
I do not expect Indiana to do well. It will and would have done better, but it's just not the kind of game that drives up high pitch interest like that.
I genuinely believe that the interest in Indiana Jones would've be significantly lesser if Microsoft hadn't bought out Bethesda. Same goes for Starfield.
Avowed looks like a worse IP than Outer Worlds, but because OW2 is multiplat from the jump, literally no one is talking about it.
I have zero evidence to suggest that tbh.
Taur007
Member
Said all of this...just for them to continue releasing traditional hardware, you and everyone saying this need to take a nap, Xbox isn't going anywhere2% growth with COD on GamePass is just horrific. These numbers are beyond terrible. Xbox is totally done as a console brand. Everyone needs to embrace Microsoft as a third party publisher now as their traditional console hardware days are definitely over.
Woopah
Member
It's just not services though. Its also first party software, third party software, DLC, MTX etc. etc. Sub
So it could be something like Gamepass is up 17% but third party software sales are down 25%.
Likewise if people got COD through Gamepass instead of buying it, or bought on PS5 instead of Xbox, then first part software revenue could also be down.
thicc_girls_are_teh_best
Member
I think you might be making the same mistake I made a moment ago; i.e conflating the content & services number with "just" Game Pass. They have WOW subs, ESO subs, Bethesda Softworks subs, whatever paid stuff is there for Battle.NET (don't think there's any, but not sure), and IIRC Fallout '76 has an optional paid subscription?
WOW's been gradually growing over the year, thanks to WOW Classic. ESO is probably at least steady, same with those other ones. Only Game Pass saw a giant price spike middle of last year so it's the only one out of those with reason for suspected major subscriber drop-off.
Which is what I feel happened, and COD going to Game Pass Day 1 (but only for the higher-tier subs) wasn't enough to offset the churn & drop-off. Hence the meager 2% growth.
Yeah, I saw that post and noted that was true. So I had to reconsider my initial post and look at the context of non-GP subs too.
Still though, my main point was GP subs in particular probably took a hard hit, and there's good enough circumstantial evidence to support it.
It's margin-of-error in that it's within 1-3%, and an amount that can easily go away next quarter due to churn alone. 2% doesn't afford a comfortable cushion in case there's a drop later on, though in context to MS I'll admit that would take several things having notable declines, not just Game Pass.
I strongly doubt Game Pass was up 17% , but since you mention DLC & MTX, I can see MTX for COD in particular being high. IIRC, they even alluded to that a bit after COD's release last year. I can also buy 3P software sales being down because in general, that's been trending downward anyway. Plus we already know COD sold most on non-Xbox platforms, and aside from COD MS had no major new releases last year sales-wise.
Something else tho, this is kind of an aside, but the way MS presents their data is just very annoying and messy. It's so intentionally obfuscated and confusing unless you've been tracking the data since years and years back, or even since they last gave hard numbers. Which to a degree is why I respect
Welfare
's info even if I feel they were overestimating Xbox's sales many times in the past. I much prefer how SIE, Sony Corp, and Nintendo provide their results. Just feels more organized, more transparent, less cross-wired.
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Topher
Identifies as young
Can't speak for others, but I was speculating that as well, partially based on MS continued reluctance to reveal numbers. We can speculate, but nothing more.
Woopah
Member
But there's nothing in this report to suggest GP subs took a hit at all. Circana said COD on Gamepass drove revenue increses and Nadella just said subs on PC are up 30%.
And where is the margin of error going to come from? If you are a publicly listed company and you're making 1-3% errors in calculating the amount of revenue you make then you're in big big trouble.
adamsapple
Or is it just one of Phil's balls in my throat?
DeepEnigma
Gold Member
Teaser: they’re flat
ChorizoPicozo
Member
James Sawyer Ford
Member
But but but....
I thought GamePass was highly profitable?
Ashamam
Member
Or he's talking about the mid gen refresh pricing....
ChorizoPicozo
Member
in order to generate profit from something, people have to buy it first.
DeepEnigma
Gold Member
Suddenly we’ll all love $700+ now.
adamsapple
Or is it just one of Phil's balls in my throat?
It's already counted as a product with high margin, you should at least read before replying Jimmy
James Sawyer Ford
Member
It's already counted as a product with high margin, you should at least read before replying Jimmy
So high margin they had to raise the price and sell more on Playstation to make up for lost sales elsewhere
adamsapple
Or is it just one of Phil's balls in my throat?
Netflix doubled its profits last year but is still raising prices in April. Those things are not mutually exclusive.
edit: make up your mind, do you want to like emoji or laugh emoji
James Sawyer Ford
Depends, is it a Series S Pro? No, is it a new generation? Yes.
Doesn't look like there will be a mid-gen Xbox, they might try to launch a new-gen earlier than the next PS though, that seems a lot more likely.
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Luminoth-4545
Member
Hardware revenue was $1.01 billion so only 1.2 million units would mean $842 per unit. I have it at 2.2 million which means $454 per unit, this also seems too costly per unit but consider that outside of the U.S the Series S & X are much more expensive which will drive up the price per unit.