Overall, Xbox is doing well, driven primarily by services.
Microsoft has released its financial statement for the latest quarter, and while there is a lot of information there to parse regarding the various sectors that the company is represented in, from cloud computing to tablet computers, what you are likely primarily interested in if you are reading this report on this site is how their gaming side performed.
Overall, the news there is great. Gaming revenue was up by 8% YoY overall to $4.23 billion, driven primarily by growth in the services in software area. Microsoft attributes this primarily to “a third party title”, though it’s pretty clear which one they meant (hint: it’s the most popular game in the world at the moment). On the other side of the scale, however, hardware sales were down 19%. Last year this period saw the launch of Xbox One X, so it does make sense that their revenue for hardware is down comparably, and this also seems to tie in with recent reports regarding how Xbox hardware is performing overall.
Monthly Average Users (MAU, the one metric Xbox consistently reports) are up by 8%, to 64 million users now. Bear in mind this counts active users across Xbox 360, Xbox One, phones, PCs, and even Nintendo Switch Minecraft players—though the exact definition of “active user” used to calculate this metric is obviously unknown.
Still, overall, this is good performance from Microsoft. Xbox is very clearly able to extract a lot of revenue from a relatively smaller install base, and it will be interesting to see how this informs their strategy going into the next generation.