As one of the largest players in the gaming industry, Microsoft has been steadily growing its gaming revenue in recent years through different channels, including Xbox consoles, PC gaming, and mobile gaming. But after years of impressive growth, the tech giant’s gaming segment saw a downturn in 2022.
According to data presented by CasinosEnLigne.com, for the first time in years, Microsoft’s gaming revenue dropped by 5% in 2022.
Gaming Revenue Dipped $720M Year-over-Year
Microsoft’s gaming segment includes revenues from Xbox hardware and Xbox content and services, comprising digital transactions, Xbox Game Pass and other subscriptions, video games, third-party video game royalties, cloud services, and advertising.
Thanks to the tech giant’s heavy investments and acquisitions, Xbox Game Studios became an enviable force in the gaming industry, with 23 studios developing Xbox exclusive games. But after years of impressive revenue growth, mainly due to a surge in Xbox sales, Microsoft’s gaming segment is slowing down.
Back in 2019, Microsoft’s gaming revenues amounted to $10.28bn, according to the company’s earnings report. A year later, when the entire gaming sector boomed after COVID-19, this figure jumped by almost 35% to $13.82bn. The growth continued in 2021 when the company’s gaming sector grossed nearly $16.3bn, or 17% more than a year before. However, that all changed last year.
After a solid first quarter, which saw a 6% YoY growth, Microsoft’s gaming revenue fell 7% year-over-year in the following three months. In the third quarter of 2022, gaming revenues rose by a modest 0.5% before falling 13% YoY during the holiday season. In the last quarter of the year alone, Microsoft gaming revenue dipped by $684 million year-over-year, pushing the 2022 total loss to over $720 million.
Xbox Content and Services Revenue Dropped Three Quarters in a Row
Most of the revenue loss in 2022 came from the Xbox content and services segment, a major revenue stream for Microsoft’s gaming business. In the last quarter of the year only, Xbox revenues dropped by 12%, following a 3% and 6% decline seen earlier in the year.
Microsoft attributed the dip to a few factors – decreased spending on first-party content, lower monetization in third-party content, and strong 2021 results.
Nevertheless, the number of monthly active users of Microsoft’s Xbox Network, an online multiplayer service associated with Xbox consoles, continued growing. As of December 2022, Microsoft’s online gaming service had around 120 million monthly active users, up from 100 million at the end of 2020.