Xbox earnings 'well below expectations' in holiday 2025, revenue down -$600 million

Microsoft's latest Q2'26 results show that Xbox had a significant downward slide in holiday revenues.

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New data shows that Xbox didn't do great over the holidays, at least compared to a year ago when it launched Black Ops 6, a game hailed as the "biggest Call of Duty release ever." Microsoft recently published its Q2'26 results for the Oct - Dec 2025 period, showing a clear decline in Xbox earnings.

Based on calculations from Install Base number-cruncher John Welfare, who does an excellent job cataloging Microsoft's gaming earnings, and Microsoft's own year-to-year calculations, the Xbox brand delivered an estimated $5.96 billion in the holiday 2025 period. These results represent a -9% decline from last year; in Q2'25, the prior year, Xbox generated $6.58 billion through holiday 2024. That's a sizable difference of ~$620 million in year-to-year earnings.

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Microsoft management says these numbers were "well below expectations," attributing this drop in revenue to first-party content.

It's worth noting that the performance of Black Ops 7 is directly impacting Xbox's earnings, but the extent of which we can't say for sure because Microsoft only seems to share that data when there's positive news.

Data from Circana shows that Black Ops 7 was beaten by multiple games, and instead of appearing at the top of the list, Black Ops 7 was the #5 best-selling game of the year. Battlefield 6 was the top seller in the US, the firm notes.

Black Ops 7 also faced steep competition on PlayStation and Steam, and the game managed to break a decade-long franchise streak by not appearing on the PlayStation Store's top 5 best-sellers in the US.