Microsoft is clearly investing heavily in Xbox Cloud Gaming, aiming to extend the Xbox experience beyond the console. Recent financial reports offer some insight into how this strategy is performing.
The tech company reported a 2% increase in Xbox content and service revenue for the period between October 1 and December 31, 2024, attributing this growth to Xbox Game Pass subscriptions.
CEO Satya Nadella highlighted the “strong momentum for Xbox Cloud Gaming.” During the quarter, the company recorded 140 million hours streamed. The PC subscriber base also saw a 30% increase, as Xbox Cloud Gaming requires either a PC Game Pass or a Game Pass Ultimate subscription.
However, a 2% increase may seem modest, especially considering the release of two highly anticipated titles, Call of Duty: Black Ops 6 (October) and Indiana Jones and the Great Circle (December). Both games were available on Game Pass from day one.
Console sales experienced a decline during this period, which aligns with Microsoft’s shift towards cloud gaming. Overall gaming revenue decreased by 7%, and Xbox hardware sales fell by 29%.
Despite the dip in overall gaming revenue, reports indicated that Microsoft surpassed EA in game revenues in December 2024, primarily driven by Black Ops 6 sales, reaching at least $465 million.
Microsoft continues to report significant growth in its cloud business overall.
Revenue in productivity and business segments reached $29.4 billion, a 14% increase largely fueled by a 16% increase in Microsoft 365 Commercial cloud services. The intelligent cloud segment generated $25.5 billion in revenue, up 19%, with server products and cloud services, particularly Azure, contributing to a 31% revenue growth.
While Microsoft is seeing substantial cloud growth, Xbox Cloud Gaming’s impact on Game Pass growth appears less pronounced, especially when considering big title releases.