Microsoft shared details on the company's financial results for Q2 FY25 on Wednesday, revealing that gaming revenue was down 7% year-over-year for the quarter ending Dec. 31, 2025. The quarter did see Xbox content and services revenue up 2%, to which the company credits growth in Xbox Game Pass. Xbox hardware revenue declined 29% year-over-year.
This is the first quarter in a full year not to see a massive year-over-year leap on paper, and that's because Microsoft's acquisition of Activision Blizzard King (and the large leap in revenue it provided) is now fully normalized in the company's results, with the last large leap being accounted for in Q1 FY25.
During the earnings call accompanying the financial results, Microsoft CEO Satya Nadella noted that Call of Duty: Black Ops 6 was the best-selling game of the quarter on Xbox and PlayStation, while also highlighting "rave reviews" for Bethesda Softworks and MachineGames' Indiana Jones and the Great Circle, which has crossed 4 million players so far after launching in December 2024.
Elsewhere in the company, Microsoft Cloud saw revenue of $40.9 billion, up 21% year-over-year, which Microsoft says is driven by Azure commitments from OpenAI. Overall, Microsoft saw $69.6 billion in revenue for the quarter, with operating income of $31.7 billion, up 17% year-over-year.
Xbox Game Pass growth is thanks to Call of Duty
We already know that Xbox Game Pass growth is largely thanks to the launch of Call of Duty: Black Ops 6, which (as an Xbox first-party game) was included day one with Xbox Game Pass Ultimate and PC Game Pass. It's also interesting to see Indiana Jones and the Great Circle highlighted. The game reached an 87 average score on Opencritic and Metacritic after launch, and my own review of Indiana Jones and the Great Circle praised the game's authenticity and fun.
Sharing further details on U.S. game sales, analytics firm Circana previously noted that subscription spending was up in October, November, and December 2024, with the gains driven primarily by Xbox Game Pass. Despite being included in the subscription service, Call of Duty: Black Ops 6 still ended the year as 2024's best-selling game in the U.S.
It'll be interesting to see what Xbox Game Pass looks like throughout 2025 and if the trend of recent growth continues. The Xbox first-party teams have a stacked lineup of content planned from across Activision Blizzard, Bethesda Softworks, and Xbox Game Studios. For the first half of the calendar year, Obsidian's Avowed, Compulsion Games' South of Midnight, and id Software's DOOM: The Dark Ages slated to roll out across February, April, and May, respectively.
Later in the year, the company plans to launch more big games, including Playground Games' Fable and Obsidian's The Outer Worlds 2, in addition to publishing Ninja Gaiden 4.
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