Xbox hardware revenue falls 32% as Microsoft cites weak late‑2025 release slate

Microsoft reported second-quarter earnings on Wednesday and said Xbox hardware revenue declined 32 percent, with console sales falling again and the company blaming year-over-year declines on a lack of strong releases near the end of 2025. In its earnings presentation Microsoft said, "Xbox content and services revenue declined 5 percent (down 6 percent CC) on a prior year comparable that benefited from strong first-party content performance." By comparison, in the same quarter in 2025 the gaming division saw a 7 percent decline overall; Xbox hardware was down 29 percent while content and services were up 2 percent.

Kotaku noted differences in recent holiday release slates: holiday 2024 included Indiana Jones and the Great Circle and Microsoft Flight Simulator 2024, while holiday 2025 brought Ninja Gaiden 4 and The Outer Worlds 2 and saw Flight Simulator arrive on PS5. The outlet also pointed to underperforming Call of Duty: Black Ops 7 and a major Game Pass price hike as possible drivers of churn, though Microsoft is not releasing new subscriber numbers.

The article said the Xbox Series X/S continues to be an ever-shrinking part of Microsoft Gaming.

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