Microsoft is investing heavily in Xbox Cloud Gaming, aiming to provide an Xbox experience without the console. A recent quarterly earning report provides insights into how this strategy is performing.
The report indicated that Xbox content and service revenue increased by 2% between October 1 and December 31, 2024, driven by Xbox Game Pass growth.
Microsoft CEO Satya Nadella highlighted the “strong momentum for Xbox Cloud Gaming.” The company reported 140 million hours streamed during the quarter, and its PC subscriber base grew by 30%, attributable to Xbox Cloud Gaming requiring either a PC Game Pass or a Game Pass Ultimate subscription.
However, a 2% growth rate may not be considered significant, especially considering the release of highly anticipated titles such as Call of Duty: Black Ops 6 (October) and Indiana Jones and the Great Circle (December), both of which were available on Game Pass from day one.
Console sales experienced a decline during this period, which isn’t surprising given Microsoft’s push towards cloud gaming. Overall gaming revenue decreased by 7%, while Xbox hardware sales dropped by 29%.
Despite the overall gaming revenue decrease, reports indicated that Microsoft surpassed EA to become the world’s leading game revenue generator in December 2024. This success was primarily driven by Black Ops 6, which generated at least $465 million.
Microsoft continues to report substantial growth in its cloud services.
Revenue in productivity and business reached $29.4 billion, a 14% increase largely driven by a 16% rise in Microsoft 365 Commercial cloud services. The intelligent cloud segment’s revenue also grew to $25.5 billion, up 19%, with server products and cloud services, notably Azure, contributing to a 31% revenue increase.
It’s evident that while cloud gaming is showing promise, its impact on overall Game Pass growth is still developing.