It is true that in the gaming world, hardware is the least important, as the king is the software. Everyone knows that you don’t make money from consoles but from video games, where the profit margin is higher, and it is easy to monetize a single development in the long term.
Microsoft has just released the financial results for the fourth and final quarter of its fiscal year 2024. The software manufacturer reported revenues of $64.7 billion and net profits of $22 billion during the fourth quarter. Revenues have increased by 15% and net income by 10%.
Microsoft’s intelligent cloud revenue, which includes the company’s server products and cloud services, totaled $28.5 billion and increased 19% year-over-year. Revenue from this part of Microsoft’s business now represents nearly 45% of all revenue.
While cloud revenues remain strong, Microsoft’s consumer device momentum continues to decline. Xbox hardware revenues have fallen again, and the numbers are concerning.
Xbox division survives thanks to Activision Blizzard King
Xbox’s revenues from content and services, including Xbox Game Pass, increased by 61% this quarter. Activision Blizzard’s revenues have once again contributed to the majority of the revenues here, with a net impact of 58 points. Without Activision Blizzard’s revenues, Xbox’s revenues from content and services would have increased by 3% year-on-year.
Microsoft revealed in February that Xbox Game Pass has already reached 34 million subscribers, including Xbox Game Pass Core members (formerly Xbox Live Gold). Microsoft plans to launch a new Xbox Game Pass Standard plan soon, aimed at replacing the Xbox Game Pass console offer for new subscribers.
The price increase for Microsoft’s Xbox Game Pass Ultimate and PC Game Pass will not take effect until September. Game Pass Ultimate will cost $19.99 per month, which is an increase of $3 compared to the current price of $16.99 per month. PC Game Pass will also increase to $11.99 per month in September.
Xbox Series are not being sold, and it’s a problem
Although there is a lot of anticipation of seeing the new Xbox Game Pass games, console sales continue to suffer. Xbox hardware revenue has dropped 42% this quarter. Microsoft plans to release a white Xbox Series X console later this year, along with a new special edition Xbox Series X in Galaxy Black color.
Microsoft has also recently focused on the message of “no need for Xbox” for its cloud streaming efforts. Microsoft’s Xbox TV app has recently arrived on some Amazon Fire TV devices, shifting Microsoft’s attention away from solely marketing console hardware.
Despite the low hardware revenue from Xbox, Microsoft’s game revenue has increased by 44% overall, once again aided by the additional revenue from Activision Blizzard. In fact, that revenue accounted for 48 points, so Microsoft’s total game revenue would have decreased by 4% if the company had not acquired Activision Blizzard.
Microsoft is not updating its Xbox Game Pass subscriber numbers this quarter, but the company did share a metric around active game users. “We now have over 500 million monthly active users across all platforms and devices,” said Microsoft CEO Satya Nadella on an earnings call. “Our content portfolio has never been stronger.”

