That’s a lot of Game Pass subscriptions.
On Tuesday, Microsoft announced its results for the third financial quarter, which ended on March 31st. The launch of the Xbox Series X and Xbox Series S in November, the company’s third quarter revenue was 50% more than the same time last year, rising to $3.53 billion.
Xbox content and services increased 34% on the backs of “third-party titles, Xbox Game Pass subscriptions, and first-party titles.” Hardware revenue, on the other hand, was up 232%, “driven by continued demand for Xbox Series X/S”. Microsoft said that gaming content and revenue included ZeniMax, which Microsoft acquired for $7.5 billion in September.
According to Daniel Ahmad, Niko Partners senior analyst, the results are “the best Q1 (FY Q3) for Microsoft’s gaming division since they started breaking out numbers about six years ago”. Ahmad also noted that while the hardware numbers are impressive, “content and services revenue is still around 80% of total Xbox gaming revenue.”
It makes sense. While Sony and Nintendo want to see you consoles and games to play on those consoles, Microsoft is clearly focused on getting you invested in their ecosystem, which has come to be defined by Game Pass. They’re happy to sell you an Xbox if you’d like one, but hardware is clearly a secondary concern for Microsoft at this point.
Microsoft reported gaming revenue of $3.53bn for the quarter ending Mar 31, 2021, up 50% YoY.
Xbox content & services revenue up 34% YoY, driven by strong software sales + Game Pass growth
Xbox hardware was up 232% YoY due to Series X | S demand + favorable comp vs last year pic.twitter.com/D8QtQ24Xj5
— Daniel Ahmad (@ZhugeEX) April 27, 2021