Microsoft's Xbox hardware revenue drops 30%
30 Oct 2025

Microsoft's latest earnings report for the quarter ending September 30 has revealed a major hit to its Xbox division.

The company witnessed a staggering 30% year-on-year (YoY) decline in revenue from Xbox hardware during the summer.

It's worth noting that this drop isn't due to any price hike in sales, as the company only increased the price of its consoles and Game Pass Ultimate subscription in October.

Content and services revenue remains stable
Content stability

Despite the drop in hardware revenue, Microsoft's revenue from Xbox content and services remained largely unchanged from last year.

The company reported growth in Xbox subscriptions and third-party content, but this was "partially offset" by a decline in first-party gaming content.

This indicates that while some areas of the business are thriving, others are struggling to keep pace with previous performance levels.

Mass layoffs impact Xbox division
Layoff impact

The Xbox division was one of the hardest-hit teams when Microsoft started cutting down its global workforce earlier this year.

The company even canceled games that were being developed for the console, including Everwild, and the studio working on a modern reimagining of Perfect Dark was closed.

These decisions were made amid mass layoffs at Microsoft, further impacting the future of Xbox gaming titles.

Microsoft reports $77.7 billion in total revenue for the quarter
Financial growth

Despite the challenges faced by its Xbox division, Microsoft posted a total revenue of $77.7 billion for the quarter, up 17% YoY.

The company's operating income also rose by 22% over the same period last year.

These figures indicate that while some divisions may be struggling, others are performing well enough to contribute to overall financial growth for the tech giant.