Xbox is Making Less Money Than This Time Last Year, But It's Complicated

Xbox is Making Less Money Than This Time Last Year, But It's Complicated

But Game Pass subs are surging.

Xbox revenue is down, but Microsoft says someone else is to blame. The publisher's financial results for the second quarter of fiscal 2020 note a 21% decrease in gaming revenue for the quarter and an 11% dip in Xbox content and services, which it attributes to better performance last year from an unnamed third-party title.

Though Microsoft doesn't specify who this third-party is, exactly, industry analyst Daniel Ahmad points to Fortnite. Fortnite spending, he says, is down year-over-year. Other analysts are also pointing to Fortnite.

Analysts note how much has changed year-over-year in revenues. For one thing, there weren't as many major launches, like Red Dead Redemption 2, for this quarter.

Microsoft does note that this downturn was offset in part by "growth in subscriptions." It looks like Xbox Game Pass is working for Microsoft, almost doubling in subscriptions according to CEO Satya Nadella, even though it can't fully offset the overall dip. ID@Xbox's Agostino Simonetta said last year that Game Pass users were buying more games than they did before they joined, so the overall boost to the base could have some interesting long-term effects.

Ahmad also notes in a follow-up tweet that this downturn isn't too unexpected at this point in a console life cycle. The Xbox Series X looms just ahead on the horizon. In a later call with investors, CFO Amy Hood says Xbox revenue is expected to decline further leading into the launch of the next generation of consoles.

It's the end of a console life cycle, and Xbox is likely building up towards the Series X's launch this coming holiday season. With a number of Xbox Games Studios lined up and one next-gen game already confirmed in Senua's Saga: Hellblade 2, it's safe to say Xbox is looking ahead, though future predictions around popular service games might be a little more tempered.

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Eric Van Allen

News Editor

Eric is a writer and Texan. He's a former contributor to sites including Compete, Polygon, Waypoint, and the Washington Post. He loves competitive games, live music, and travel.

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