The boss of Xbox has insisted that sales of the console are constrained by supply and that there is “more demand than consoles available,” as Microsoft’s gaming business heads into the crucial holiday season.
Microsoft reported its FY27 Q1 results overnight, and the Xbox struggle is a familiar one despite new CEO Asha Sharma’s “reset” of the gaming business. During the three months ending September 30, 2026, overall Xbox revenue declined 2% year-on-year, although that’s an improvement on the 10% decline the previous quarter.
Xbox content and services revenue decreased 2% and 1% in constant currency, driven by “declines in third-party content and Xbox Game Pass, partially offset by growth in first-party content.” Xbox hardware sales, meanwhile, fell 14%. Xbox console sales, which have seen a number of price rises, have struggled for some time now, and Microsoft hasn't reported a sales figure for the Series X and S for years.
Despite the financial struggles, Xbox is still a huge business. It brought in $5.379 billion in the quarter ($5.508 billion the same quarter last year). But Xbox is a small piece of the overall Microsoft pie. To put Xbox into context, Microsoft’s cloud computing platform, Azure, brought in an eye-watering $33.1 billion this quarter alone — six times more than Xbox.
It’s worth noting that the recently released Gears of War: E-Day and Call of Duty: Modern Warfare 4 came after the end of Q1, so any revenue attributed to those games will be calculated in the current quarter’s results. Q2, by the way, also includes the likes of World of Warcraft: Forever, which looks like a surefire hit for Blizzard, and the behemoth that is Grand Theft Auto 6.
Sharma took to X / Twitter to discuss the results, insisting Xbox’s “accountability margin,” which is understood to be profit margin, improved this quarter. Sharma’s restructure of Xbox, which has seen thousands of staff lose their jobs, multiple studios leave the fold, and various projects shut down, was explained in the summer as part of an effort to improve this “accountability margin” figure. Xbox is now doubling down on its big hitters, such as Minecraft, Fallout, and The Elder Scrolls, in a bid to improve its financial outlook.
Minecraft and WoW Forever “set records,” (in the case of WoW Forever, we’re talking about the hugely popular beta). Neither Activision nor Microsoft has announced sales for Modern Warfare 4, instead pointing to the critical acclaim Infinity Ward’s shooter has enjoyed. “Call of Duty had its most acclaimed release in more than a decade,” Sharma said. PC platform revenue, though, grew “double digits” (we don’t know how much exactly, or what that means in dollar terms).
And then Sharma’s main point: “Console sales remain constrained by supply, with more demand than consoles available. We’re working to get more consoles into players’ hands, including through our expanded refurbishment program. We’re making progress, with a lot more work ahead.”
سەرچاوەی فەرمی بە زمانی ئینگلیزی: https://www.ign.com/articles/asha-sharma-insists-theres-more-demand-than-consoles-available-as-xbox-hardware-sales-continue-to-plummet
