It was previously revealed that Microsoft's gaming division would focus resources exclusively on profitable projects.
In its latest report for the first quarter of fiscal year 2026 (July-September 2025), Microsoft disclosed the results of the Xbox gaming division. Total gaming revenue decreased by 2% - from $5.621 billion to $5.508 billion, resulting in a year-over-year loss of approximately $113 million.
The key reason for the decline was a sharp drop in hardware sales: Xbox revenue fell by 29% due to lower console sales.
Despite this, Xbox content and services revenue increased by 1% due to growth in Xbox Game Pass subscriptions and third-party content sales, partially offsetting the decline.
