During Microsoft’s quarterly financial conference call, Chief Executive Officer Satya Nadella and Chief Financial Officer Amy Hood talked more about the Xbox platform as part of the Q&A session following the prepared remarks.
Asked to explain the large growth registered in gaming revenue, Nadella explained that Microsoft has a strategy for the gaming segment that really helps the company articulate both the growth opportunities as well as the investment across the various layers of the business.
According to Nadella, the Xbox One is the “highest-engagement console in the marketplace.” Any time a new game releases, whether it’s first or third-party, “the fact that Xbox is where the best engagement is driven benefits” Microsoft. As a platform owner, that’s a “great growth area” for the company.
Yet the strategy doesn’t stop there, because of Microsoft has Xbox Live, Game Pass, and Mixer are all additional opportunities to “really serve the gamers” as they play more games or watch games on different platforms.
The last element, which Nadella thinks is new and is already paying its dividends on the Azure growth side is that Microsoft has taken all the knowledge of what it means to build first-party games, and has built it into services in Azure for game developers. The PlayFab acquisition speaks directly to that. Those are the levers Microsoft has in gaming, and investors will see the effects on the More Personal Computing segment and overtime on Azure.
Hood added that she expects to see in the current quarter a continuation of the growth seen in the past quarter in Xbox software and services. Part of this is consistent even going back a few quarters. It has been a double-digit growing factor for a while, and it’ll continue to be, despite the fact that there might be some volatility in the numbers. Third-party hit games will push the numbers higher, but there is also a “really strong base” to the business that is the result of having a “vibrant platform with fans that believe in it and come to it with all the value that has been added.”
If you’d like to read learn more about Microsoft’s business performance during the past quarter, you can check out our dedicated article.
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