Microsoft’s recent financial report for the first quarter of its financial year that ended on September 30 showed an upward curve. As of now, much feels evident that the rise in sales is not Microsoft’s content related, but more to be credited to rising sales for Xbox. For a company that otherwise refrains from giving solid numbers, this year witnessed as Microsoft put up (perhaps happily) that their sales were up 13% in comparison to the same quarter last year.
The quarter lasted from July to September end. Also interestingly the same period of last year was already a 166% rise from its previous year (2020). Interestingly again in 2020 Xbox One was about to end with Xbox Series X|S Awaiting release. The sales for Microsoft’s Xbox are up and high, but why?
A closer look at Microsoft’s Sales Revenue and Xbox’s part in it
The financial report closed in that Xbox gaming revenue had increased by 0.47% moving from $3.59 Billion to $3.61 Billion. The first quarter (July-Sep 2022) revenue was perhaps the company’s best-ever for Xbox revenue. For further comparison, Microsoft saw an 11% rise in the previous year’s same quarter (2021).
Microsoft’s other avenues were profiting that much, it’s likely just the XBOX
- Although there have been notable software launches, it probably isn’t that. This can be made clear when looking at their first and third-party content sales, which weren’t necessarily high.
- The overall content consumption and its revenue were down by 3% while a simultaneous increase in Game Pass subscriptions.
Coming from IGN – on yesterday’s earnings call, Microsoft CEO Satya Nadella told how their PC Game Pass subscriptions were up 159% from the same period last year. He also updated that 20 million people have used Xbox cloud gaming services to date.
The reason for the rise of Xbox sales explained
Before we dive into this it will probably help to clear that the world has been suffering from a lagging supply chain ever since, well, a darn long time.
- The ongoing chip shortage affected the auto industry, but also the electronics industry. The supply chain shortage refers to a shortage of semiconductor chips, crucial for multiple components of both computers and gaming consoles.
- Speculations foretold of a possible decline in the supply chain shortage, meaning that more is to be available by the end of 2022. Toshiba Corp., one of the major companies that create power-regulating chips speculated that the chip shortage may continue through the end of 2022.
Yet in what seemed to be a loosening up of the same, buyers saw a decrease in many electronics.
Graphics Card buyers also enjoyed the drop in GPU prices due to Supply Chain’s growing abundance
- Perhaps the most revered still remains that of GPU price drops. The greatest example is Nvidia launched RTX 3090 Ti standing at $1,999 MSRP at the end of March this year. Today retail prices have dropped as much as 43%, close to half their original, standing at about 750$.
Graphics card buyers aren’t the only ones enjoying. The loosening of the supply-chain lack has brought about great news for both new gen and previous consoles. Sony’s PS5 has seen a massive bump in sales this year. Xbox One, Xbox Series X, and S have also not fallen behind.
Another reason for the Xbox sales rise is the holiday season
Phil Spencer, Microsoft’s head of gaming and Xbox said at The Wall Street Journal’s WSJ Tech Live Conference in Laguna Beach, California that will cost $300 through the holiday shopping season while will remain at $500.
However, Spencer also noted that the prices will start rising after the holiday season. Almost all sales see a hike during Halloween and leading up to Christmas anyways.
Microsoft CEO Nadella also revealed during Microsoft’s Financial Year 2023 first quarter earnings conference call that Xbox Series X Console sales were to users who had never previously owned an Xbox console. “As we look towards the holidays, we offer the best value in gaming, with Game Pass, and Xbox Series S. Nearly half of the Series S buyers are new to our ecosystem,” said Nadella.
As such it seems that another reason for the rising Xbox sales is not only the holiday season, or supply chain abundance leading to reduced prices, but also a growing gaming industry globally.
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