Microsoft Gaming Revenue Surges, Hardware Sales Decline Amid Industry Changes

REDMOND, Wash. — Microsoft reported a 5% increase in gaming revenue for the January-March quarter of 2025, reaching $5.7 billion. The tech giant credited the boost primarily to its Game Pass service and popular franchises like “Call of Duty” and “Minecraft.” The results contrast with a 6% decline in hardware sales, mainly from Xbox console devices.

During an investor call on Wednesday, Microsoft CEO Satya Nadella highlighted the 8% growth in content and services, driven by increased Game Pass subscriptions. Nadella noted, “Minecraft” has seen a 75% spike in weekly active users since the release of “A Minecraft Movie” on April 4.

Despite strong performance in software and services, Xbox’s hardware sales fell by $200 million compared to the previous year. This decline comes as rival Nintendo prepares to unveil its new Switch 2 console in June, while Microsoft has yet to announce plans for its next-generation console.

In a shift toward multi-platform availability, Xbox has released exclusive games like “Indiana Jones and the Great Circle” on PlayStation and Nintendo devices. This strategy could help soften the blow from hardware sales as the company focuses more on game content and cloud services.

Microsoft’s total revenue for the quarter reached $70.1 billion, an increase of 13%, with net income at $25.8 billion, up 18%. Analysts had predicted $68.4 billion in revenue. Nadella expressed optimism during the call, stating that the company’s gaming strategy is paying off, emphasizing that Microsoft is now prioritizing services over hardware sales.

This new direction appears to be successful. According to recent reports, Game Pass subscriptions surged, and the company anticipates continued growth in its gaming revenue for the next quarter.