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As the second most valued company in the world, Microsoft is under constant pressure from investors to continue delivering growth, and this means constantly trying new business models.
For the Xbox that has been doubling down on subscription services, and it appears to be paying off, with Microsoft reporting record revenue for their gaming division.
In their recent FQ4 2021 earning call, Satya Nadella praised the division, saying:
“We continue to lead in the fast-growing cloud gaming market with last month — just last month, we made Xbox Cloud gaming available on PCs as well as Apple phones and tablets via the browser in 22 countries with more to come. Millions have already streamed games to their desktops, tablets and phones. And the Xbox Series S and X are our fastest-selling consoles ever, with more consoles sold live to date than any previous generation”.
Microsoft’s Gaming division (Xbox) reported revenue of $15.37 billion for the full financial year, with Nadella saying it was the best year ever for Xbox, with revenue up 32.8% YoY, primarily driven by the pandemic-related gaming dividend.
While Microsoft’s Xbox is outsold by the Playstation, their revenue growth has primarily been driven by a $2.3bn increase in software/subscription revenue, report Niko Analysts’s Daniel Ahmad.
It’s not all about Game Pass, however, with the Series X|S boosting hardware revenue by 92% YoY.
For the full financial year, Xbox hardware generated $3.53bn in revenue, while content and services generated $12.17bn.
Microsoft said they will continue to focus on creating bespoke games and first-party exclusives, to make gaming on Xbox even more appealing to the masses. With Game Pass now allowing you to access your games on nearly any device, it may soon be completely irrelevant whether Sony or Microsoft is selling the most consoles.