Yesterday, Microsoft posted its quarterly earnings report, and it was a big boost for cloud and other departments. On the Xbox end, Microsoft posted a 6% software and services increase year over year, which bodes well for its content strategy.
During an earnings call with CEO Satya Nadella (via John Welfare), Microsoft shared some updated stats on Xbox’s performance, with a surprising update on how the firm is performing on its rival console platform: PlayStation.
- Xbox content and services grew 8% year over year, making it the best Q3 in Xbox gaming history.
- The boost was driven by Game Pass subscriptions, Call of Duty, and Minecraft.
- Minecraft in particular saw a 75% increase in weekly average users, buoyed by the successful Minecraft movie. Our sources recently told us that Minecraft is enjoying its highest concurrent user share in history, although Microsoft made no mention of this during the earnings call.
- Xbox hardware sales decline by 6%, but the downward trend seems to be abating somewhat.
- PC Game Pass grew 45% year over year, a massive success given competition from Steam and other competing PC platforms.
- Microsoft also said that it is now the biggest publisher on PlayStation, in terms of preorders and preinstallations. This is likely in part thanks to Indiana Jones, Forza Horizon 5, and DOOM: The Dark Ages.
- Xbox Cloud Gaming posted its highest use rate ever, at 150 million hours streamed, up 10 million hours quarter over quarter.
The comments to investors undermine recent analyst suggestions that Xbox Game Pass has flatlined in growth, although most analyses tend to focus on U.S. centric markets. I’ve heard that Xbox Cloud Gaming (which is part of Xbox Game Pass Ultimate) is now bigger than both console and PC in certain markets, most likely countries like Brazil where import taxes make owning native hardware cost prohibitive.
In the near term, Microsoft has DOOM: The Dark Ages, Elder Scrolls IV: Oblivion, and more to buoy Game Pass churn as we head into May and June, with the Xbox Showcase 2025 slated for June 8. The Showcase will offer a glimpse at Microsoft’s upcoming slate of games for PC, Xbox consoles, and PlayStation as well. And Microsoft also has a big opportunity with the Nintendo Switch 2, which brings Nintendo’s platform closer to power parity with the likes of the Xbox Series S and the Steam Deck.
