Xbox? More like Ex-box

Late last week, Microsoft revealed that its Xbox hardware revenue dropped 31% year-over-year in the first calendar quarter of 2024 (January–March), due to a decrease in gaming consoles sold. That follows a year-over-year drop of 30% in the same quarter in 2023.

This gaming-console revenue crash appears isolated to Microsoft. An ArsTechnica analysis determined that while “recent” console releases – including the Nintendo Switch and Sony’s PlayStation 5 – have experienced a general upswing in sales at the start of their fourth full year on the market, Microsoft’s latest Xbox, which was launched in 2020, stands as a major outlier.

• Previous ArsTechnica analyses have shown PlayStation consoles generally see their sales peaks in their fourth or fifth year of life, with Nintendo portables showing a similar sales trend.
• However, the Xbox Series S/X progression looks more similar to that of the Wii U, which was already deep in a "death spiral" at a similar point in its commercial life.

Software is eating the world (and driving Microsoft’s gaming revenue)… Disappointing console sales aside, Microsoft’s acquisition of Activision Blizzard helped boost the company’s gaming revenue in the January–March quarter by ~51% year-over-year. In fact, following the AB acquisition, Microsoft is now publishing more top-sellers on the PS5 than Sony.

But there’s still a place for hardware… Microsoft’s next gaming console will achieve “the largest technical leap you will have ever seen in a hardware generation,” according to Xbox President Sarah Bond.