The Numbers Show Xbox's Current Plan Isn't Working

An anonymous reader quotes a report from Gizmodo: It's time for Xbox to eat some humble pie and perform some real soul-searching. Microsoft released its latest quarterly earnings report and proved the worst of our fears about its gaming brand. Not only are Xbox hardware sales down significantly, but the brand itself is barely treading water. Gamers are voicing their displeasure with their wallets, but Microsoft's top brass is still only thinking about the margins. Microsoft was more keen to promote the scale of its cloud and AI services revenue -- which was up 28% year over year -- than talk about its beleaguered gaming brand. The company's overall gaming revenue fell by 2% compared to the same time last year. This was precipitated by a 'decline in Xbox hardware,' which was down by 22% following a steady decline quarter after quarter. Its first-party games and its Game Pass subscription were doing better, though the overall growth was only up by 1%, and even that was driven by the 'better-than-expected performance' of third-party games. You can give credit to titles like Clair Obscur: Expedition 33 for why Xbox isn't in an even deeper hole than it is now.

The tech giant has no expectation that its Xbox brand will start making more money anytime soon. In its earnings call with investors, Microsoft Chief Financial Officer Amy Hood said the company expects Xbox will continue to decline 'in the low to mid-single digits' for the following quarter. That's mostly due to the lack of landmark first-party titles. Just this month, Xbox released Ninja Gaiden 4, The Outer Worlds 2, and Double Fine's The Keeper. Xbox also made a huge marketing push for its first handheld, made in partnership with Asus, the ROG Xbox Ally and Ally X. In any other year, this would be a big month for any gaming company. The dour outlook comes after months of bad news. After two subsequent price hikes, Xbox Series S and Series X consoles now cost between $100 to $150 more than they did at launch five years ago. Microsoft also pushed prices of its Game Pass Ultimate subscription tier from $20 to $30 per month. A full-year's subscription would now demand $360. In a separate article, Gizmodo reviews Microsoft's new ROG Xbox Ally X handheld, which 'offers a better experience overall' than the 'other small-scale Windows PC gaming devices released this year.' However, 'it's still nowhere close to what you truly want from a console.'

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