Tag Archives: Microsoft Gaming

Business, Gaming, News, Xbox

How Microsoft and Xbox are doing reaching the half of fiscal year 2025?

Microsoft recently released its FY25 Q2 earnings report, revealing a mixed bag of results. The company posted a revenue of $69.6 billion, a 12% increase year-over-year. Net income also saw a significant rise, reaching $24.11 billion compared to $21.87 billion in the same quarter last year. The growth was primarily driven by the Intelligent Cloud segment, which saw a 20% increase in revenue to $25.76 billion.

Microsoft Gaming: A Closer Look

Microsoft Gaming, a division established in 2022, has become a major player in the gaming industry. The division oversees the production and sales of Xbox hardware, Xbox Game Studios, and services like Xbox Game Pass and Xbox Cloud Gaming. With the acquisition of Activision Blizzard, Microsoft Gaming now owns some of the most popular and highest-grossing media franchises, including Call of Duty, Candy Crush, Warcraft, Halo, Minecraft, and The Elder Scrolls.

Key Highlights from Microsoft Gaming’s Performance

  1. Revenue Decline in Xbox Hardware: Despite the overall growth, Xbox hardware revenue saw a steep decline of 29% compared to the previous quarter. This decline is notable as it includes data over the holiday period, typically a strong sales period for gaming hardware.
  2. Growth in Xbox Content and Services: On a positive note, Xbox content and services revenue, which includes Xbox Game Pass, grew by 2% over the quarter. This growth was likely bolstered by popular titles like Indiana Jones and the Great Circle and continued support for Call of Duty: Black Ops 6.
  3. Publishing on Competing Platforms: Microsoft’s strategy of publishing its first-party titles on competing platforms like PlayStation and Nintendo has been a significant factor in the growth of Xbox services. Titles like Doom: The Dark Ages and The Outer Worlds 2 are expected to be released on PlayStation simultaneously.
  4. Integration with Handheld PCs: Microsoft is working on integrating the Xbox and Windows gaming experience on handheld PCs, which may include improved integration of the Windows Store and PC Game Pass.

Microsoft CEO Satya Nadella and CFO Amy Hood have expressed optimism about the future of Microsoft Gaming. They expect Xbox content and services revenue growth to be in the low to mid-single digits, driven by first-party content and Xbox Game Pass. The company is also focusing on cost efficiency and innovation in AI infrastructure, which could further boost its gaming division.

Elsewhere for Microsoft

Intelligent Cloud Segment

  • Revenue: $25.76 billion, up 20% year-over-year.
  • Azure Growth: Azure and other cloud services revenue grew by 31%, although this was slightly lower than the 33% growth seen in the previous quarter.
  • AI Investments: Microsoft is heavily investing in AI infrastructure, committing to spend $80 billion this fiscal year. The company’s AI business has surpassed an annual revenue run rate of $13 billion, up 175% year-over-year.

Productivity and Business Processes

  • Revenue: $29.4 billion, up 14% year-over-year.
  • Microsoft 365: Continued strong performance, with significant contributions from Microsoft 365 Copilot and other productivity tools.

More Personal Computing

  • Revenue: $14.7 billion, relatively unchanged from the previous year.
  • Windows PC Sales: There was a notable increase in Windows PC sales, driven by demand for new hardware and upgrades.
  • Xbox Services: Despite a decline in Xbox hardware revenue, Xbox content and services revenue grew by 2%, supported by titles like Indiana Jones and the Great Circle and Call of Duty: Black Ops 6.

Financial Highlights

  • Total Revenue: $69.6 billion, a 12% increase year-over-year.
  • Net Income: $24.11 billion, up from $21.87 billion in the same quarter last year.
  • Earnings Per Share (EPS): $3.23, beating expectations of $3.11.

Strategic Initiatives

  • AI Infrastructure: Microsoft is focusing on cost efficiency and innovation in AI infrastructure, including investments in small language models (SLMs) to reduce AI costs.
  • OpenAI Partnership: Microsoft and OpenAI have a new agreement through 2030, giving Microsoft access to OpenAI’s intellectual property and APIs for use within Copilot.

Environmental, Social, and Governance (ESG)

  • ESG Commitments: Microsoft continues to invest in sustainability and social responsibility initiatives, aiming to balance operational discipline with environmental and social practices.

Microsoft’s FY25 Q2 earnings report showcases the company’s continued growth and strategic investments in key areas like cloud computing and gaming. While there are challenges, particularly in Xbox hardware revenue, the overall outlook remains positive, especially with the strong performance of Xbox content and services. Microsoft Gaming, with its diverse portfolio and strategic initiatives, is poised to play a crucial role in the company’s future success.

Games, Gaming, News, Xbox

For Microsoft there is a future for Xbox for both software & hardware

There has been a talk about Microsoft Gaming and Xbox in general and not for the good in terms on how plausible will be to maintain its position as part of the “big three” along Sony (with PlayStation) and Nintendo and how futures look blurry.

To mitigate this blurriness, Microsoft Gaming CEO, Phil Spencer, took advantage on the proper media tour post-Microsoft earnings to give some visualization on the state of the gaming market for Xbox.

Xbox is NOT quitting hardware business

Hardware historically hasn’t been a great forte in terms of Xbox Earnings, and of course, with the entry of Activision Blizzard as part of the earning has not helped matters at all.

Added to the fact that the current Game Pass Cloud push includes resorting in partners had ware like Amazon’s Fire TV devices.

Burt despite on how the public perception might be, for Phil Spencer, is all part of the plan.

To Rolling Stone he said:

We’ll definitely do more consoles in the future, and other devices.

We think about hardware that can create unique value for our players or creators on our platform. We don’t need to do incremental hardware for our own benefit.

Does a new device really give you a unique experience on screen in some way? [It’s] less like the old days, going from the original Xbox to 360 – that was standard definition to high definition. No [it’s] arder ti show té Benefit.

Also, Spencer admitted that Microsoft is working heavily on one of the poor kept-secret, the Xbox device that will challenge the Steam Deck and Nintendo Switch in the portable gaming market, but we are still years away from a proper release, so chances about what “Microsoft wants to talk at The Game Awards” in terms of hardware…might be safe to not go high on expectations.

More releases outside Xbox and PC aren’t ruled out

Early this year, Microsoft surprised the gaming world releasing four games of Xbox Game Studios in other platforms, after a big push on exclusivity.

Phil Spencer, this time told Bloomberg that they are not feeling limited on approaching other platforms after being brought the possibility of the next Halo game available on Playstation5.

I do not see sort of red lines in our portfolio that say ‘thou must not.

Also, Spencer said to Bloomberg that Spencer said Xbox is still open to more acquisitions following last year’s $69 billion purchase of Activision Blizzard.

Methodical on expansion and debunking an Avowed theory

Finally with Game File, there was an opportunity to have Phil Spencer talk about how Microsoft Gaming and Xbox Game Studios sees the development of expansions for their first party games.

While there is no rulebook and developers are not obligated to add expansions, personally he dislikes “manipulative” expansions in terms of the expansion doesn’t serve the whole experience of the game to the user and for example, it is used to “fill a cliffhanger” technically speaking.

Finally, it was time to acknowledged what happened to Avowed that was delayed until February 2025.

And no, there were not a technical thing or anything, just that this Holiday season will be a busy one with Diablo IV new expansion, Call of Duty Black Ops 6, Indiana Jones & The Great Circle, and Xbox felt that Avowed could just be lost in the “new game” backlog unneedled.