Xbox Content, Services Drive 5% Overall Microsoft Gaming Revenue Growth, Hardware Sales Down 6%
Microsoft's gaming revenue was up 5% year over year for the January-March quarter.
The tech company's gaming-specific sales reached $5.7 billion for the three-month period, up $270 million from the comparable year-ago figures.
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Content and services sales increased 8%, which Microsoft attributes to performance across Xbox's Game Pass offering (which the company has been promoting more over the past year with Day 1 availability for many of its biggest games) and its 'Call of Duty' and 'Minecraft' franchises. Hardware revenue, which is made up of sales for Xbox devices, including the Xbox Series X and S consoles, was down 6% total.
'Call of Duty' released its most recent installment, 'Black Ops 6,' last fall and 'Minecraft' likely benefited somewhat from anticipation for the Jack Black-led film, which debuted April 4 to big box office numbers.
The decrease in Xbox's console sales comes as competitor Nintendo is set to debut its highly anticipated Switch 2 device in June. Similar to PlayStation, Xbox has yet to reveal its own plans for a next-gen console.
Last year, Xbox committed to releasing some of its exclusive titles, which are usually reserved for Xbox's own consoles and PCs, on Nintendo and PlayStation devices. The most notable game to be included in that business strategy is the Bethesda Studios-developed 'Indiana Jones and the Great Circle,' which debuted on PS5 earlier this month.
Overall, Microsoft posted $70.1 billion revenue for the quarter (up 13%) and a net income of $25.8 billion (up 18%) or earnings per share (EPS) of $3.46. Analysts had predicted $68.4 billion in revenue and EPS of $3.22.
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Republicans accused the majority party of once again hoarding that money for projects in their own districts. 'Let's hide this stuff. Let's hide it so that the public doesn't see it until it's too late. Let's blame everybody but ourselves. The Trump administration did this. The Trump administration did that. I call BS,' GOP Rep. John Cabello of Machesney Park, who was a Trump delegate during last year's Republican National Convention in Milwaukee, said during the House debate late Saturday. Cabello also said Republicans weren't given a chance to fund projects on behalf of taxpayers in their districts. On the revenue side, a tax amnesty program that would allow delinquent filers to pay off their tax debt without penalties is expected to generate $228 million in one-time money for the state. The plan also includes a set of tax law changes that would give the state the ability to tax more offshore and out-of-state corporate income. Taken together, those changes would bring in an estimated $336 million in ongoing revenue. Democratic Rep. Will Guzzardi of Chicago, a House budget negotiator and member of the progressive caucus, said the budget will be balanced, in part, with 'revenues paid for by the biggest and most profitable corporations that do business in Illinois, who can afford to pay a little bit more to help us fund the operations of our state, closing loopholes and going after financial tactics that those companies use to avoid paying what they should.' There's also a new per-wager tax on online sportsbooks, expected to generate $36 million in the coming year. Taxes will go up on tobacco from the current rate of 36% of wholesale price for cigarettes and 15% for vaping products to 45% across the board, including nicotine pouches, which have exploded in popularity in recent years. The $50 million in anticipated revenue would go to tobacco cessation efforts and the state's Medicaid program. Republicans criticized the use of one-time revenue streams to fill shortfalls, including the diversion of money from road projects by again delaying a shift of revenue from the sales tax on gasoline from the state's general fund to the road fund, freeing up $171 million to spend on operations. Pritzker defended the practice, saying Democrats crafting the budget tried to ensure 'any one-time revenues … really matched up with or … were diminishing of the one-time expenditures that we have to make.' Even without a substantial overhaul of the state's income or sales taxes, Pritzker said, the state has 'gotten really much closer than ever before' to erasing a structural budget deficit his administration pegged at $3.2 billion shortly after he took office in 2019. Still, some other Democrats, especially members of the party's progressive wing, believe there needs to be a deeper look at how services for residents across the state are funded, particularly given the uncertain economic times. Guzzardi, the House budget negotiator, was a co-sponsor of legislation that put the graduated income tax question on the 2020 ballot and 'fought really hard' in the unsuccessful campaign for its passage. 'I still think it's the kind of change that our state is going to need, the systemic change to our tax structure, to ease the burden on working families and to generate the revenue we need to fund vital services by asking the folks at the top to pay,' Guzzardi said Sunday. 'We have to make a more convincing case to the voters, that much is really clear.' More immediately, though, lawmakers are under pressure to address the dire financial situation facing Chicago-area mass transit with the impending expiration of federal coronavirus relief money. In the closing hours of the spring session, Senate Democrats introduced and passed a plan to address mass transit governance and funding, including a new $1.50 fee on retail deliveries. Sen. Ram Villivalam, a Chicago Democrat and point person on transit issues, called the plan 'unprecedented' and said it would create 'the world-class, safe, reliable, accessible, integrated public transit system we need for our northeastern Illinois region.' But key House Democrats said their chamber didn't take up the Senate proposal before adjourning for the spring because they wanted to focus first on overhauling the way the various transit agencies operate before allocating taxpayer money to those changes. 'I would say that the commitment has always been to do reform first. And then talk about doing revenue,' Rep. Eva-Dina Delgado, a Chicago Democrat, said. 'We worked really hard along with the Senate on putting together that reform. Unfortunately, we had different approaches to how to get that across the finish line.' Rep. Kam Buckner, another Chicago Democrat involved in transit negotiations, said it would've been 'irresponsible' for House members to vote on the Senate plan without being thoroughly familiar with its funding proposal. The measure came over from the Senate after midnight Sunday, when the threshold to pass legislation taking effect before June 2026 increased from a simple majority to three-fifths. That didn't allow enough time for House Democrats to review the proposed tax and round up the votes needed to pass it, Buckner said. Pritzker likewise said Sunday that he hadn't had much time to review the delivery tax proposal, which was met with stiff opposition from business groups and others. 'I obviously want to make sure we're lowering, not raising, taxes whenever we can,' the governor said, adding that he looks forward to reviewing future proposals in the coming months. It's important for there to be 'significant work that'll need to be done over the summer and in the fall' on governance and funding the Chicago-area and downstate transit systems, Pritzker said.
