No company ever wants to report a year-on-year decline in revenues in what’s meant to be one of their growth businesses – and when the company in question is a major platform holder and one of the pillars of the whole industry, such a decline is sure to make people nervous.
Microsoft’s announcement this week that its Xbox numbers in the past quarter were down 7% year-on-year, with declines in revenue from both hardware (down 11%) and content and services (down 6%), is by no means in “the sky is falling” territory. Nonetheless, there will be plenty of speculation and concern over the extent to which the issues causing this decline are localised – both in terms of being localised to Microsoft specifically, and to this quarter specifically – versus being a warning sign for the industry’s broader performance in the months to come.
There’s no simple answer to that question because there’s no single factor that can be blamed for the entirety of Microsoft’s growth backtrack in this quarter. Rather, there’s a combination of factors at work here – some of which are indeed localised to one company and one time period, but others of which are a legitimate source of concern for the industry as a whole.