Microsoft held its second quarter results today, with the company announcing that despite a 9% year-over-year increase in gaming revenue, sales of Xbox hardware fell.
On the contrary, the increase in income was caused byMicrosoft acquisition of Activision Blizzard and Xbox Game Pass subscription numbers. Xbox hardware revenue fell 25% as the company sold fewer consoles.
The company hasn't said much about gameplay overall, which was interesting. But Microsoft is investing heavily in both AI and cloud services, with revenue in the latter category up 23% year-over-year to $168.9 billion.
“This quarter, Microsoft Cloud surpassed $50 billion in revenue for the first time, up 26% year-over-year, reflecting the strength of our platform and accelerating demand,” said Microsoft CEO Satya Nadella.
Microsoft basically dominated the cloud gaming market with Game Pass, whichthey raised their prices last year. Healthy subscription numbers, despite the pressure felt by many consumers at the time, appear to have offset the company's hardware losses.
Xbox Game Pass is still a great value, but its long-term costs add up
Xbox Game Pass has historically been an incredible value for gamers looking for a rotating library of games, but lately it's struggled to find balance.
“In gaming, we're committed to delivering great games for Xbox, the PC cloud and all other devices, and we've seen record PC players and paid streaming hours on Xbox,” Microsoft CFO Amy Hood said on the call.
Microsoft could be uniquely positioned at a time whengaming hardware may face problems due to lack of RAM. With a partnership with OpenAI and significant investment in cloud infrastructure, Xbox may be in a better position than many think.
