Microsoft CEO: Xbox Business “Growing Profitably;” “Very Strong Start” for Xbox Game Pass and Mixer

Microsoft's executives share more details about the state of the Xbox business, including profitability and services.

on July 20, 2017 6:30 PM

During Microsoft’s financial conference call for the fourth quarter of fiscal year 2017, ended on June 30th, Chief Executive Officer Satya Nadella and Chief Financial Officer Amy Hood gave an update on the corporate perspective of the Xbox business.

Nadella talked in-depth about the state of the business, explaining that it’s growing profitably, and mentioning that Microsoft is uniquely positioned to capture a large share of the opportunities offered by the expanding gaming market.

“Our gaming business now is more than nine billion dollars and growing profitably. The gaming world is growing faster than ever before from gameplay across multiple devices, to the explosive growth in streaming and esports, to new subscription services and mixed reality scenarios.

We’re uniquely positioned to capture a large share of this opportunity because of our ability to unite the global community of gamers through Xbox Live – now 53 million-strong, and growing – and to enable new experiences across PC, consoles and mobile.”

Nadella then mentioned how Xbox One X will expand Microsoft’s portfolio of consoles.

“Our approach is to let gamers play the games they want, with the people they want, on the devices they want. At E3 we celebrated the passion of gamers by introducing Xbox One X, broadening our portfolio of gaming devices with the world’s most powerful console.”

We also hear that the recently-launched services Mixer and Xbox Game Pass are “off to a very strong start.”

“We launched two new services to broaden our reach and enrich our gaming experience, both of which are off to a very strong start. Mixer, a new livestreaming service makes it easier than ever before for gamers to create and share across platforms, and to interact in entirely new ways. The Xbox Game Pass is a digital subscription service that expands our existing gaming value proposition. “

Hood explained that later in the call that gross margin (the difference between revenue and cost of goods sold, divided by revenue) in fiscal year 2018 – which is the current one – should drop by about a point partly due to hardware launches, including that of Xbox One X.

While providing the outlook for the current fiscal quarter (Q1 of fiscal year 2018) Hood explained that Microsoft expects revenue for the More Personal Computing segment (which includes games) to be between 8.6 and 8.9 billion dollars. The gaming segment specifically is expected to have “typical seasonality revenue pattern for a pre-holiday quarter.”

If you want to read more about Microsoft’s financial performance in the past quarter, you can check out our dedicated article here.

 /  Executive News Editor
Hailing from sunny (not as much as people think) Italy and long standing gamer since the age of Mattel Intellivision and Sinclair ZX Spectrum. Definitely a multi-platform gamer, he still holds the old dear PC nearest to his heart, while not disregarding any console on the market. RPGs (of any nationality) and MMORPGs are his daily bread, but he enjoys almost every other genre, prominently racing simulators, action and sandbox games. He is also one of the few surviving fans of the flight simulator genre on Earth.