After a few years of proud gaming revenue rises thanks to Xbox Series X and S sales, Microsoft's gaming segment finally seems to be slowing down a bit. And while a dip is expected, the lack of major first-party game releases isn't exactly helping things.
The company posted its Q2 earnings today, and for the first time in a while, Xbox posted a year-over-year drop. Gaming revenue was down 13% year-over-year, and hardware revenue specifically was down the same. Xbox content and services revenue overall was down 12%, with Microsoft attributing the dip to a few factors: decreased spending on first-party content, lower monetization in third-party content, and a strong prior year comparable.
What this essentially means is that Xbox didn't have as strong a first-party line-up to spend on this past holiday, but also, 2021 was always going to be tough to beat. In software, Xbox had Halo Infinite, and in hardware, the Series X and S were sailing on high demand combined with increased supply as supply chain restrictions began to lighten up.
So while Xbox's dip is a shift from recent patterns, it's a predictable and relatively small one, putting Microsoft's gaming division at roughly the same revenue levels it was seeing in 2020-2021. And Game Pass subscriptions, Xbox says, are continuing to grow.