Microsoft gaming revenue falls 7% in Q4 FY22, overall revenue grows 12%

Microsoft’s revenue from the gaming business fell by $259 million or 7% in Q4 FY2022, the Cupertino company said in its quarterly earnings report on Wednesday. Revenue from Xbox devices fell 11% while Xbox content and services fell 6%. In the previous quarter, Microsoft had reported a 6% YoY increase in gaming revenue. 

Microsoft attributed the decline in gaming content and services revenue to lower engagement hours and monetisation in third-party and first-party content. However, it added that the Xbox Game Pass subscriptions grew. 

Though sales of gaming consoles soared right after the Covid-19 outbreak and the launch of new Xbox and PlayStation devices, revenue from consoles has remained flat, according to a May report by Data.ai (formerly App Annie) and IDC. The global gaming market is set to cross $222 billion this year and mobile gaming is set to extend its lead over PC and console, accounting for 61% of the overall gaming market, the report added. 

After announcing the $68.7 billion deal to acquire Activision Blizzard in January, Microsoft became the third largest gaming company in the world after Sony and Tencent. 

In personal computing, Microsoft's revenue increased by $270 million or 2% even as the revenue from licensing of Windows OS to OEMs fell by 2%. Microsoft said that this decline was due to “production shutdowns” and a “deteriorating” PC market. The silver lining for Microsoft in the PC segment was its Surface device which did well in the commercial segment-- revenue from Surface increased by $136 million or 10%, the company added. 

Further, revenue from Microsoft Cloud was $25 billion, growing at 28% YoY.

Overall, Microsoft's revenue across segments remained positive due to the fear of recession and economic uncertainty. The company reported a revenue of $51.9 billion growing by 12%, while net income grew 2% to $16.7 billion.

Early this month, Microsoft said that it is realigning business groups and roles after the close of the fiscal year (June 30), while maintaining that it is not linked to fear of recession and they will continue to hire for other roles. The company said that the layoffs will affect less than 1% of its overall workforce and will span across partners and geographies.