Xbox Is Killing It Right Now

Under normal circumstances, any company that launches a relatively successful console with a strong software services play is liable to have a good quarter. And when you’re Microsoft, and that services play is the very good Xbox Game Pass, and you’ve got COVID-19 limiting supply and encouraging more people worldwide to stay inside and game, things will naturally look great for Xbox.

The launch of any new console generation is generally going to cause its maker to enjoy a better-than-normal quarter. And early Wednesday morning Australian time, Microsoft confirmed the obvious: Xbox revenue is way up.

Almost double, in fact. The launch of the Xbox Series X and S saw Microsoft’s hardware revenue — that’s money made from controllers, consoles and the like — soared by 86 per cent. Content and services did well too, growing by 40 per cent for the quarter “driven by strength from third-party titles, Xbox Game Pass subscriptions and first-party titles,” Microsoft said.

Image: Microsoft Investor Relations

There’s really not much in the quarter that wasn’t good news for Microsoft, really. Outside of Xbox, Microsoft’s commercial cloud revenue grew to $US16.7 billion. Microsoft as a whole made $US43.1 billion in revenue for the quarter with $US15.5 billion net income, which just highlights how large a behemoth Microsoft still is. Remember: Microsoft’s Azure business is now bigger than Windows itself.

It’s expected that Microsoft’s gaming revenue should continue growing over the coming quarters, too. With the increased demand for gaming and the supply limits on the next-gen consoles, corporate America (and everywhere else) is expecting higher-than-normal sales of consoles over the next year. AMD — whose investor call is live as I’m writing this — confirmed as much to their own investors, who are naturally just as happy with the massive increase in demand for the Xbox Series X and S.

“Our [first quarter] guidance is better than normal seasonality, we normally see the first half weaker than the second half given than the second bend — the shape from a market standpoint, we see PCs and gaming better than seasonal, there’s some pent up demand,” AMD CEO Dr Lisa Su said when asked about demand for AMD’s semi-custom business, which supplies the SOCs that power the next-gen Xbox and PlayStation 5 consoles.

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