Microsoft Gaming Revenue Drops 9% in Q2 Amid Xbox Slump
Microsoft revealed sharp declines in its Gaming division Wednesday.
Gaming revenue fell 9 percent in the second quarter of fiscal year 2026.
Xbox content and services revenue dropped 5 percent year-over-year.
The quarter ended December 31.
Overall, company revenue surged 17 percent to $81.3 billion.
Cloud business drove this strong growth.
However, Gaming metrics disappointed across the board.
CFO Amy Hood confirmed Xbox content fell below expectations.
A lack of first-party titles fueled the downturn.
Xbox hardware revenue plunged 32 percent accordingly.
Microsoft forecasts mid-single-digit declines for Xbox content in Q3.
Strong prior-year comparisons weigh on results.
Hardware revenue will likely fall further year-over-year.
Game Pass growth should partially offset these losses.
The company withheld specific Game Pass subscriber figures.
CEO Satya Nadella reaffirmed commitment to games everywhere.
Xbox, PC, cloud, and other devices remain priorities.
Q3 hit records for PC players and paid streaming hours.
This contrasts sharply with broader personal computing trends.
That segment dipped 3 percent overall.
Windows OEM and Devices revenue rose 1 percent.
Windows 11 now boasts 1 billion users.
This marks a 45 percent jump year-over-year.
Microsoft Cloud revenue soared to $51.5 billion.
It climbed 26 percent from last year.
Operating income reached $38.3 billion.
Thus, non-gaming strengths cushioned the Xbox blow.
Investors eye Game Pass and content slates for recovery.
Tech Newsroom 24/7 