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Microsoft has released its earnings report for the first quarter of the 2026 fiscal year, which ended up September 30, 2025. Xbox gaming revenue decreased by $113 million or two percent year-on-year to $5.51 billion. This was driven by a decline in hardware, offset partially by growth in content & service. This is better than the forecast, which expected a decline in the mid to high single digits percent (-4% to -9%). Xbox content & services revenue increased one percent compared to the same quarter a year ago. This was driven by growth in third-party content and Xbox Game Pass, partially offset by a decline in first-party content. This is better than the forecast, which expected a decline in the mid single digits percent (-4% to -6%). Xbox hardware revenue dropped 29 percent year-on-year due to a lower volume of consoles sold. There was no forecast given for hardware. Microsoft did increase the price of Xbox consoles in most regions on May 1 and a second time in the US on October 3. Overall for the quarter, Microsoft reported for the quarter revenue was up 18 percent year-over-year to $77.673 billion, operating income increased 24 percent to $37.961 billion, and net income was up 12 percent to $27.747 billion. A life-long and avid gamer, William D’Angelo was first introduced to VGChartz in 2007. After years of supporting the site, he was brought on in 2010 as a junior analyst, working his way up to lead analyst in 2012 and taking over the hardware estimates in 2017. He has expanded his involvement in the gaming community by producing content on his own YouTube channel and Twitch channel. You can follow the author on Bluesky.Full Article – https://www.vgchartz.com/article/466133/xbox-revenue-drops-2-yoy-hardware-revenue-falls-29-due-to-fewer-consoles-sold/