Microsoft held its second quarter earnings call today, with the company reporting that while gaming revenue grew 9% year-over-year, Xbox hardware sales fell.
Instead, there has been an increase in revenueMicrosoft's acquisition of Activision Blizzard and Xbox Game Pass subscription numbers. Xbox hardware revenue fell by 25% as the company sold fewer consoles.
The company didn't say much about gaming overall, which was interesting. Microsoft, however, is investing heavily in AI and cloud services, with revenue in the latter category growing 23% year over year to $168.9 billion.
“This quarter, Microsoft Cloud surpassed $50 billion in revenue for the first time, up 26% year-over-year, reflecting the strength of our platform and accelerating demand,” Microsoft CEO Satya Nadella said on the earnings call.
Microsoft has essentially cornered the cloud gaming market thanks to Game Pass, whichIts value increased last year. It appears healthy subscription numbers, despite many consumers feeling pushback at the time, are offsetting the company's hardware losses.
Xbox Game Pass is still a strong value, but its long-term costs are adding up
Xbox Game Pass has historically been an incredible value for gamers looking for a rotating gaming library, but it has struggled to find balance recently.
“In gaming, we're committed to delivering great games on Xbox, the PC cloud and all other devices, and we've seen more PC players and paid streaming hours on Xbox,” Microsoft CFO Amy Hood said on the call.
Microsoft may be a unique place at a timeGaming hardware may be facing problems due to lack of RAM. Thanks to a partnership with OpenAI and a significant investment in cloud infrastructure, it may be that Xbox is in a better position than many think.
