Microsoft's big bet in Xbox Cloud Gaming isn't really delivering big Game Pass increase
Microsoft has been pushing for an Xbox-less Xbox experience for a while
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Key notes
- Xbox content and service revenue grew 2% from October to December 2024, driven by Xbox Game Pass.
- Xbox Cloud Gaming showed “strong momentum” with 140 million hours streamed, and a 30% increase in PC subscribers.
- Despite these gains, Microsoft saw a 7% drop in gaming revenue and a 29% decline in Xbox hardware sales.
It’s no secret that Microsoft is betting big on Xbox Cloud Gaming as a broader effort to make the Xbox-less Xbox experience a thing. And now, a recent quarterly earning report seems to indicate that it’s paying off.
The Redmond tech giant said that between the October 1 and December 31, 2024, period, Xbox’s content and service revenue grew by 2%, which was driven by growth in Xbox Game Pass.
Microsoft boss Satya Nadella praised the “strong momentum for Xbox Cloud Gaming.” The company recorded at least 140 million hours streamed in this quarter and its PC subscriber base experienced a 30% jump as Xbox Cloud Gaming requires a PC Game Pass or a Game Pass Ultimate subscription.
But still, a 2% growth doesn’t really seem to be a good number, especially in the quarter where two hotly-anticipated titles like Call of Duty: Black Ops 6 (October) and Indiana Jones and the Great Circle (December) arrived. Both were also a part of Xbox’s day-one releases on the Game Pass.
Still, though, Microsoft experienced yet another hit in console sales this quarter, but it doesn’t really come as a surprise as the company is pushing for cloud gaming everywhere. In this period, Microsoft’s gaming overall revenue was down by 7% while revenue from Xbox hardware sales plummeted by 29%.
But still, despite the gaming overall revenue dip, previous reports suggest that Microsoft overtook EA & its EA FC 25 in becoming the world’s number-one in game revenues in December 2024. At least $465 million were made, mostly from Black Ops 6.
In the overall market, Microsoft said that it still records a lot of strong increases in the cloud.
The company’s revenue in productivity and business reached $29.4 billion. That’s a 14% growth, driven (mostly, but not only) by a 16% increase in Microsoft 365 Commercial cloud services. Its revenue in the intelligent cloud segment also reached $25.5 billion, up 19%, with server products and cloud services, particularly Azure, contributing to a 31% revenue growth.
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