Xbox revenue plunged by $113 million as console sales fell 29%

Earlier reports indicated that Microsoft’s gaming division will concentrate its resources solely on profitable ventures.

In its recent report for the first quarter of fiscal 2026 (July–September 2025), Microsoft released results for the Xbox gaming division. Total gaming revenue declined by 2% — from $5.621 billion to $5.508 billion — marking an approximate $113 million year‑over‑year decrease.

The downturn was mainly driven by a sharp fall in hardware sales: Xbox hardware revenue dropped 29% as console unit sales slowed.

Despite that, revenue from Xbox content and services increased by 1%, supported by growth in Xbox Game Pass subscriptions and third‑party content sales, which partially offset the decline.

Source: iXBT.games