What just happened? Despite Microsoft laying off over 15,000 employees so far this year, the company has just revealed that revenue from its Xbox Game Pass service reached almost $5 billion for the first time over the last year. Overall company revenue for the fourth fiscal quarter was up 18%, while net income jumped 24%.
Microsoft’s Xbox content and services revenue, which include Xbox Game Pass, was up 13% for the quarter. CEO Satya Nadella said on an earnings call that Game Pass revenue had reached “nearly $5 billion” over the last year.
While Microsoft doesn’t reveal specific subscriber numbers, an employee’s profile suggested it had reached 35 million two months ago – Microsoft confirmed that they were at 34 million in February 2024. However, Nadella did say that Microsoft has 500 million active users across multiple gaming platforms and devices.
There have been a series of big day-one first-party releases on Game Pass over the last year, including Indiana Jones and the Great Circle, Doom: The Dark Ages, and Elder Scrolls IV: Oblivion Remastered. Microsoft also launched games on PS5 this year, including Forza Horizon 5, Age of Empires II: Definitive Edition, Age of Mythology: Retold, and Indiana Jones.
“We are now the top publisher on both Xbox and PlayStation this quarter,” said Nadella.
Overall gaming revenue for Xbox was up 10% YoY, increasing by $2 billion for the whole fiscal year. Unsurprisingly, however, Xbox hardware revenue was down 22%. Microsoft increased the price of Xbox consoles and controllers worldwide in May, pushing the Xbox Series X up by $100 to $599. It also increased the base price of its games to $80 but has since reversed that decision following a backlash (EA did the same thing).
As always, Azure cloud services were the highlight of Microsoft’s financial report. Revenue grew 39% YoY during the quarter and surpassed $75 billion for the entire financial year, marking a 34% increase.
Last week, Nadella addressed – or tried to – the fact that Microsoft was experiencing plenty of success while laying off more than 15,000 people this year, including a large round of 9,000 in early July. He called it “an enigma of success in an industry that has no franchise value.” He also thanked departing employees for their contributions, which one imagines wouldn’t have made things easier for them, especially as the company has reported another quarter of impressive growth.
