Microsoft gaming revenue drops as company transitions to Xbox Series X

The march to new hardware continues.

Xbox Series X

The team at Microsoft is wasting little time when it comes to moving on to the next generation of gaming hardware. However, that appears to have an effect on where its current Xbox One sales sit.

The tech behemoth recently revealed its sales numbers for the second quarter of its current fiscal year. While there is growth with Xbox Live subscriptions, overall gaming revenue dropped off over the holiday season.

Even though the company’s overall revenue reached a $36.9 billion total for the quarter (up 14 percent from the previous year), its game division made a relatively smaller amount. It managed to decrease around $905 million for the quarter, or approximately 21 percent. In addition, hardware revenue saw an even bigger drop-off, by 43 percent, mainly due to a “decrease in volume and price of consoles sold.”

As for Xbox content and services, they took a drop as well, with a $295 million drop-off from the previous year (around 11 percent). Microsoft noted this is due to a “high prior year comparable, primarily from a third-party title.” Though it didn’t mention this title specifically, many analysts believe this title is Epic Games’ Fortnite.

Not all the news is bad. Subscription growth is on the rise. Microsoft didn’t state specifically what its total numbers for Xbox Live were, but it did say that they have grown since its previous report of 65 million users last year.

So why the drop? It’s probably due to the company transitioning from its current hardware to Xbox Series X, which it revealed last month during The Game Awards. There’s a lot of buzz with that new system, leaving many people wondering why they should pick up an Xbox One X at this point. There are also other factors to consider, including the lack of first-party releases (Gears 5 was its most notable highlight) and a number of its games being compatible with PC.