Xbox hardware revenue down to second-lowest point in the last 10 years

Xbox hardware revenue is down to its second-lowest point in the last 10 years...but this isn't actually bad news for Microsoft right now.

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Microsoft's latest Q2FY25 results have been posted, showing interesting results for Xbox. Based on the data provided, Xbox gaming earned $6.581 billion throughout the Holiday 2024 quarter, driven significantly by content and services (game sales, microtransactions, subscriptions, etc). Xbox hardware only accounted for 15% of total revenues, or about $1.01 billion.

These numbers mean that FY25 saw the second all-time low for Xbox hardware revenues in the last decade, second only to the $815 - $830 million earned in the Holiday 2019 quarter. Interestingly enough, this is actually a good thing for Microsoft...at least for the time being.

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Remember that Xbox hardware is produced and sold at a loss, so less hardware sales and less revenue could mean less consoles sold, which would mean less units sold at a loss. It also depends on how rapidly Microsoft is producing Xbox consoles, and given the statements from CEO Satya Nadella on profits over everything, overall console manufacturing may be dialed down to reduce the losses on per-unit sales.

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It's also been discussed that Xbox consoles have reached their saturation point, thus necessitating Microsoft's $75.4 billion buyout of Activision Blizzard King in a bid to expand to PC and mobile.

In other news, Xbox Gaming CEO Phil Spencer has confirmed that Microsoft will continue making Xbox hardware into the future, but we have to wonder if these new systems will also be sold at a loss like prior consoles.

Perhaps the rumored Xbox handheld will be the first-ever profitable Xbox?