Microsoft’s recent financial report highlights a persistent downward trend for the Xbox division, mirroring past performance. This difficult period for Xbox is expected to continue, as Microsoft anticipates further declines. The Xbox business has been struggling for some time, making this latest quarter another period of decreased performance for Microsoft’s gaming arm.
The tech giant’s gaming revenue decreased by $380 million, a 7% drop. This reduction was attributed to lower Xbox content and services revenue, as well as weaker hardware sales. Xbox content and services revenue fell by 5%, while Xbox hardware revenue plummeted by 33% due to a decrease in console sales.
During the fourth fiscal quarter (April 1st to June 30th), Microsoft projected that the decline in Xbox sales would persist. They forecast a 10% to 20% decrease in Xbox content and services revenue. This projected drop is linked to a challenging comparison with the same period last year, when Microsoft had a strong portfolio of first-party content. The most significant game for Xbox released during the fourth quarter of 2025 was Forza Horizon 5 for PS5.
Microsoft plans to release Forza Horizon 6 on May 19th. Its release is confirmed for PC and Xbox Series X/S on that date, with a subsequent launch for PS5.
Microsoft CEO Satya Nadella stated that Xbox set “new records” for monthly users during the past quarter, and the total “game streaming hours” also reached record levels. Nadella indicated that the company is working to “win back” Xbox fans, citing Xbox head Asha Sharma’s recent decision to reduce Game Pass prices as an example.
“We know we have work to do to win back every player, both now and in the future,” Sharma concluded.
