Microsoft has released its financials for the first quarter of 2023, and the results are a land of contrasts. For Xbox, the biggest news would be that subscriptions for Xbox Game Pass on PC had an incredible growth of 159 percent, according to CEO Satya Nadella.
Yesterday during The Wall Street Journal’s Tech Live conference, Xbox boss Phil Spencer called Game Pass “profitable” for Microsoft, as the service makes up 15 percent of the company’s broader revenue from content and services. Computer is still the big driver of the service, while the growth of the console has stopped.
According to a new report from Axios, however, the jump in PC Game Pass subscribers couldn’t help the service meet an annual company goal believed to be tied to Nadella’s salary. Microsoft had hoped that the service would grow by 73 percent by the end of June 2022, but Game Pass reportedly achieved only 28 percent.
As for Xbox Cloud Gaming, Nadella boasted that 20 million users used the streaming service, up from last year’s 10 million. It doesn’t hurt that Microsoft has recently gone out of its way to make the service easily accessible.
As for the Xbox consoles, overall hardware revenue increased this quarter by 13 percent, while having a small decline of 3 percent in content.
During Microsoft’s earnings call, executive VP Amy Hood attributed that drop to “declines in first-party content as well as in third-party content, where we had lower engagement hours and higher monetization, partially offset by growth in Xbox Game Pass subscriptions.”
A lack of first-party titles or content has been a consistent theme from Microsoft for years, as its big releases tend to be less frequent than Sony or even Nintendo.
One interesting tidbit from Microsoft CEO Satya Nadella is that nearly half of Xbox Series S owners are brand new to the Xbox ecosystem. The Series S is a cheaper, all-digital alternative to the Xbox Series X, and is proving to be a suitable onboard system to the larger Xbox brand.
Looking to the future, Hood briefly touched on the still-in-progress merger with Activision Blizzard. Even as British regulators conduct a deeper investigation into the acquisition, Hood claimed the deal is still expected to close by the end of the 2023 fiscal year.