Xbox hardware revenue dropped a considerable 29% in the last quarter, according to its latest financial report. Microsoft's gaming segment faces something of an uncertain future amid price hikes and a move away from conventional consoles and platform exclusivity. That uncertainty is on full display in Xbox's earnings from the past quarter.
Microsoft has embraced a software-first strategy for a while now, and it's often paid off for the company. At the end of fiscal year 2025, the gaming giant revealed that Xbox Game Pass had hit a new revenue record, earning nearly $5 billion to offset a 22% year-over-year decline in hardware revenue. However, more recent Xbox figures may appear a little shakier.
According to a quarterly financial report filed with the SEC, overall Xbox gaming revenue is down a whopping $113 million in Q1 FY26. Most of that drop came from falling console sales, which led to the 29% decrease in hardware revenue. While shrinking console sales may be expected to an extent, the company did release the ROG Xbox Ally and Xbox Ally X this past quarter, but the handhelds were not enough to stop the drop. Interestingly, Xbox hardware revenue fell by the...
