Microsoft has released its Q4 and full-year financial report for the outgoing fiscal year, revealing a mixed bag of results with declines in hardware and flat gaming sales but record-breaking engagement metrics. The earnings report and associated analyst commentary illustrate the story of a transformative year for the tech giant's gaming segment, amidst a challenging global economic environment.
The More Personal Computing segment, which includes Xbox, reported a 4% year-over-year (yoy) decline in Q4 revenue to $13.9 billion. Gaming revenue came in flat with a meager 1% yoy increase, attributable to weak performances from first and third-party content. The segment, while an important part of Microsoft's portfolio, was the lowest revenue generator for the company, outperformed by Productivity and Business Processes ($18.3 billion, up 10% yoy) and Intelligent Cloud ($24 billion, up 15%).
Despite the figures, Xbox content and services revenue increased by 5% year-on-year, boosted by Game Pass' growth and third-party content sales.
The mixed results become more interesting against the backdrop of an increasingly competitive gaming industry. especially as Sony continues to reap the benefits of its previous investments while doubling down on its live-service ventures. On the one hand, Xbox hardware sales are down 13% year-on-year, following a Q3 report that showed a 30% drop compared to the first three-quarters of FY22. This contrasts sharply with PlayStation's recent sales records, which reported hardware sales three times stronger year over year. Yet, Microsoft's gaming division still managed to pull in approximately $15.47 billion in full-year sales, marking its second-best fiscal year ever.
