Microsoft Acknowledges Xbox Decline, Discusses Strategy Shift

Microsoft has released its financial results for the third quarter of fiscal year 2026, and they proved to be weak for the gaming division.

The company, accustomed to records, showed a slowdown, and in some segments, a noticeable decline. Management had to comment on the situation and reassure investors.

The most significant decline was in console sales. Revenue from Xbox Series X/S fell by almost 33% year-over-year. Analysts note that demand had been declining even earlier: marketing was weaker, and price increases in the second half of 2025 cooled buyer interest.

The content and services segment looks more stable, but even here, a 5% decline was recorded. The company attributes this to a strong base in 2025, when major releases like Avowed, South of Midnight, and Indiana Jones and the Great Circle were launched. The current quarter could not compete with them.

There is also positive news: the number of monthly active users and time spent streaming reached record highs. This indicates that the audience continues to actively use the ecosystem.

Company CEO Satya Nadella announced a shift in focus:

This is also evident with Xbox, where the team is once again focusing its actions on our most dedicated fans and players and shaping the future of digital entertainment. The changes to the Game Pass service introduced last week are an example of how we respond to our customers' feedback.