Microsoft’s gaming revenue keeps going up, even though hardware sales are down

Microsoft’s Q1 2025 net are in, and the results show that Microsoft’s package gaming revenues are measurement up moreover arsenic Xbox hardware gross is declining.

The institution says that its Xbox contented and services gross grew 61 percent twelvemonth complete twelvemonth from the erstwhile 4th — a fig driven by “53 points of nett effect from the Activision acquisition,” according to the company’s property release. But hardware revenues again declined, down 29 percent this quarter, which whitethorn beryllium influenced by Microsoft’s continued strategy to make its games disposable more wide than conscionable Xbox consoles.

During the quarter, Microsoft introduced its caller Xbox Game Pass “Standard” tier and a price hike for Xbox Game Pass Ultimate. Q1 besides saw the presence of Call of Duty: Modern Warfare III on Xbox Game Pass, but this 4th doesn’t see the effect of Call of Duty: Black Ops 6, which launched past week.

The company’s Intelligent Cloud section was besides a agleam spot, pinch full revenues up 20 percent twelvemonth complete twelvemonth to $24.1 cardinal driven by Azure. Azure and different unreality services gross was up 33 percent, “including 12 points” from request for its AI services. Productivity and Business Processes, which includes its Office products, was up 12 percent twelvemonth complete twelvemonth to $28.3 cardinal successful revenues.

Microsoft’s OEM and Devices gross — which are now reported together — were up 2 percent. However, that fig was driven by “growth successful Windows OEM” and “partially offset by a diminution successful Devices,” Microsoft says.

Microsoft, for illustration galore different companies, is investing heavy successful AI-focused features and tools correct now, particularly to improve Copilot. “AI-driven translator is changing work, activity artifacts, and workflow crossed each role, function, and business process,” Satya Nadella, chair and CEO of Microsoft, says successful a statement. “We are expanding our opportunity and winning caller customers arsenic we thief them use our AI platforms and devices to thrust caller maturation and operating leverage.”