What you need to know
- Microsoft has reported its FY22 Q2 earnings, with gaming revenue up 8% year-over-year.
- Xbox content and services revenue increased 10% year-over-year, driven by growth in Xbox first-party titles and Xbox Game Pass.
- Demand for Xbox Series X|S consoles saw Xbox hardware revenue grow 4% year-over-year.
Microsoft shared its FY22 Q2 earnings report on Tuesday, giving details on growth for the Xbox brand. Overall, gaming revenue was up 8% year-over-year, while content and services revenue was up 10% and hardware was up 4%. This growth was driven by Xbox first-party titles, Xbox Game Pass and demand for Xbox Series X and Xbox Series S consoles, though partially offset by a decline in third-party revenue.
This decline in third-party revenue can be partly attributed to the underperformance of major third-party titles, such as Activision's Call of Duty: Vanguard and EA's Battlefield 2042. The success of Xbox first-party games can be noted in Halo Infinite and Forza Horizon 5, which charted at #2 and #16 on the December 2021 NPD report, respectively.
Microsoft recently shared that Xbox Game Pass has reached over 25 million subscribers. All of this growth is directly compared to Microsoft's FY21 Q2 earnings a year ago. This is in line with continued growth seen in the prior quarter ahead of the holiday 2021 season, per Microsoft's FY22 Q1 earnings.
Looking ahead, Microsoft continues to invest heavily in new content for Xbox, including expanding its first-party lineup. Microsoft is acquiring Activision Blizzard for $68.7 billion, adding teams like Infinity Ward and Blizzard Entertainment to the Xbox first-party group, while also acquiring major gaming IP such as Call of Duty and World of Warcraft. This is in addition to Microsoft's prior acquisition of ZeniMax Media, parent company of Bethesda Softworks, for $7.5 billion.
