During Microsoft’s quarterly financial conference call, Chief Executive Officer Satya Nadella and Chief Financial Officer Amy Hood talked about the performance of the Xbox and gaming business.
Nadella started the call by mentioning that Xbox is reaching new customers with new offers. He explained that the Xbox One X was the top-selling premium console in the Holiday season in the United States (which means that Microsoft’s new console beat the PS4 Pro), paired with “strong sales” of the Xbox One S. He also pledged that Microsoft will “continue to innovate in consoles to attract high-value gamers” who want immersive 4K experiences, to build a broader subscription service with Game Pass and to extend its gaming services to all devices in the customers’ lives across the console, PC, and mobile.
He continued explaining that the decision to release exclusive content on Game Pass simultaneously with global release increases the value of the subscription for both members and industry partners, and the service is off to “a very good start.”
Mentioning the 59 million monthly active Xbox Live members in the previous fiscal quarter, Nadella boasted record usage of Xbox Live services, record viewers on Mixer, and record Minecraft users.
He also mentioned the recent acquisition of PlayFab, which serves more than 700 million gamers playing over 1,200 games.
Hood then talked about the outlook for the current quarter, mentioning the forecast between 9.1 and 9.4 billion dollars of revenue for the whole “More Personal Computing” segment which includes gaming. Specifically in the gaming segment, Microsoft expects growth similar to the last quarter, but with a revenue mix shift towards software and services as opposed to hardware. The company also predicts to enjoy continued year-on-year growth of the Xbox Live userbase.
Interestingly, an analyst mentioned to Nadella “murmurings” about the Xbox One falling behind PS4 in terms of sales and exclusive games, asking about how he feels about Microsoft’s position in gaming. Nadella answered that Microsoft “feels good” about Xbox One X and the sales volume of Xbox One S, with a “halo effect” of the premium console driving the lower-end console as well. He added that the real strategy going forward is not only to do “great work” on consoles but also to complement that with great work on PC.
According to Nadella PC gaming is a growth opportunity so Microsoft is there with its subscription offer, and with streaming that is bringing PC and console closer together, and also on other devices like mobile with Minecraft.
Overall we’ll see Microsoft do good work on consoles and competing in that market, but more importantly, they have a much broader gaming view in terms of what value they can add with subscription services and streaming services across all devices.
On top of that, gaming is a growth area for Azure as well, and due to the recent acquisition, improved services on the cloud are going to attract more developers.
If you want to read more about Microsoft and Xbox’s results during the past fiscal quarter, you can check out our dedicated article.