Microsoft published its financial report for the fourth quarter of fiscal year 2026. For Xbox, it was the third consecutive quarter with declining performance. Revenues for the Xbox Content & Services division decreased by 10%, and console sales by 13% compared to the same period last year.
For the entire fiscal year, Xbox revenue decreased by $1.7 billion (7%). Gaming and services revenue decreased by 5%, and device sales plummeted by 29% due to declining demand for consoles. Microsoft also spent $500 million on employee payments as part of a large-scale restructuring of the gaming division.
Xbox head Asha Sharma stated that in fiscal year 2026, the company's ecosystem attracted over 200 million new players, which did not lead to revenue growth.
In fiscal year 2026, over 200 million new players joined Xbox and our games, but our business did not grow at the same pace. We must close this gap by investing in what players truly want. This will take time, but we expect a return to growth by the end of fiscal year 2027.
Microsoft CEO Satya Nadella added that the company has “the best franchises in the industry” and expects Xbox to return to growth in fiscal year 2027. However, CFO Amy Hood warned that further declines in gaming division revenue and console sales are expected in the next quarter.