Xbox delivers record $23.45 billion annual revenue, hardware drops -25%

Microsoft's games division has delivered a record-breaking $23 billion in annual revenue for the first time ever.

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Xbox's full-year results are in, and they're triumphantly good: Microsoft generated $23.455 billion from gaming throughout FY25, more than it ever has before. This is a staggering milestone for the Xbox brand as it approaches PlayStation levels of annual revenue; for reference, Sony made nearly $30 billion from PlayStation last fiscal year.

Software and services led the charge, accounting for a whopping 95% of annual Xbox revenues. Hardware saw a decline by -25% year-over-year to $270 million, and as numbers-cruncher Welfare JBP notes, this year delivered the sixth lowest hardware revenues in Xbox history.

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"Gaming revenue increased $2.0 billion or 9% driven by growth in Xbox content and services, offset in part by a decline in Xbox hardware. Xbox content and services revenue increased 16% driven by the impact of the Activision Blizzard acquisition and Xbox Game Pass. Xbox hardware revenue decreased 25% driven by lower volume of consoles sold," Microsoft writes in its annual 10K form.

The news comes after Microsoft conducted mass layoffs throughout the year, with reports claiming management chose to eliminate jobs rather than decrease investment in AI.

Microsoft also has plans for the next generation of Xbox hardware, but reports indicate that these new Xbox consoles may in fact be Windows 11 PCs running Xbox OS environments. Reports also suggest that Microsoft may not be the only one making these new Xbox PCs, and that Microsoft could team up with OEMs like ASUS, Lenovo, and MSI to ship new Xbox systems. Valve already tried this plan years ago with the Steam Machines, and it didn't work then.