Microsoft's Xbox content and services revenue decreased 2% year-over-year for the July–September 2026 quarter. While this marks four consecutive quarters of negative growth, the drop narrowed significantly compared to the previous quarter.
| 📒 | - Xbox content and services revenue down 2% YoY in July–September 2026 (down 1% in constant currency) - Decline narrowed by 8 percentage points compared to previous quarter's 10% drop; hardware revenue fell 14% - Driving new release push and targeting return to growth in FY2027 under CEO Asha Sharma |
According to Microsoft's Q1 FY2027 (July–September 2026) earnings results released on October 28 (local time), Xbox content and services revenue decreased by 1% in constant currency. The metric includes first- and third-party game titles, in-game content, the Xbox Game Pass subscription service, cloud gaming, and advertising revenue.
On an investor metric basis, Xbox content and services revenue has posted four consecutive quarters of year-over-year declines starting from the October–December 2025 quarter. However, compared to the previous quarter (April–June 2026), where the same category fell 10% YoY, the decline narrowed by 8 percentage points to 2% this quarter.
Meanwhile, sluggish console sales persisted this quarter. Xbox hardware revenue decreased 14% year-over-year during the same period. Total revenue for Microsoft's Devices and Consumer segment, which includes the Xbox business, also fell 3% YoY to $15.5 billion (approx. 20.67 trillion won).
Under CEO Asha Sharma, who took office in February, Microsoft Gaming is pursuing profitability improvements and structural transformation. Previously, Xbox's full-year FY2026 (July 2025–June 2026) revenue fell 7% year-over-year, with hardware revenue suffering a steep 29% decline. Following these sluggish results, foreign media recently reported that private equity firms were considering acquiring Xbox, but Microsoft and CEO Sharma officially denied the sale rumors and set a goal to return to growth within FY2027.
Xbox is seeking a turnaround in the second half of this year by introducing major new titles and preparing next-generation hardware. Following the release of Halo: Campaign Evolved in July and Minecraft Dungeons 2 in late September, Xbox showcased the console-exclusive Gears of War: E-Day and a 25th-anniversary controller in October. Internally, development is also underway on a handheld device and the next-generation console project, Project Helix.
