How's Xbox Doing? Key Takeaways From Microsoft's Earnings

Xbox Live users are at a record high, but gaming revenue is down.


Microsoft today announced the results for the final quarter of calendar 2016, providing some insight into the performance of its various businesses, including its gaming division.

During its second fiscal quarter, which ran from September through December 2016, gaming revenue was down three percent year-over-year to $3.595 billion. Microsoft attributed this to lower hardware sales. This lines up with what we've seen in the NPD Group's US sales reports, where console sales are down due in part to lower prices. No specific unit sales figures were cited in the earnings; in the US, we know Xbox One was the top-selling console over the second half of the year.

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Microsoft added that Xbox software and services revenue were up for the quarter, though the gains weren't enough to offset the decline in hardware sales. (The same was true of Microsoft's gaming business during the previous quarter.) Specifically, software and services were up 18 percent, and digital transactions topped $1 billion for the first time ever thanks to "continued adoption of digital distribution and a strong game lineup."

Xbox Live Active users in December jumped 15 percent to a record 55 million. When Microsoft last provided an update on this in October, the figure had experienced a decline to 47 million. This new number puts Live well ahead of where it stood a year prior, when the number was 48 million.

Microsoft will host its usual earnings call with investors later today to discuss the company's performance. Gaming often goes largely unmentioned, but we'll report back if it has anything of interest to share.

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