Microsoft has reported a 32% year-on-year decline in its 2025 gaming hardware revenue.

On the 29th, Microsoft unveiled its comprehensive financial results for the fiscal year ending December 31, 2025. The gaming division showed a downward trend, with both hardware and service sectors seeing a decline compared to the same period last year. This is attributed to a combination of underperforming major titles and a decrease in console sales.

Digging into the details, total Xbox gaming revenue dropped by 9% year-on-year. In particular, hardware revenue plummeted by 32% due to slowing sales. Microsoft raised console prices in most regions in May 2025 and implemented an additional price hike in the US in October of the same year. This combination of pricing strategy changes and sluggish device sales is analyzed to have exacerbated the decline in hardware performance. In fact, Xbox console sales were even discontinued at Costco locations in the UK and the US.

Xbox content and services revenue also fell by 5%. During the earnings call, CFO Amy Hood stated that the decline was due to the "underperformance of first-party content across the platform." This appears to be because the 2025 release, 'Call of Duty: Black Ops 7', did not meet expectations compared to the significant success of 'Call of Duty: Black Ops 6' in 2024.

During the earnings call, CEO Satya Nadella stated, "In gaming, we remain committed to delivering great games across Xbox, PC, cloud, and all other devices, and we have recorded the highest number of PC players and paid streaming hours on Xbox to date."

Meanwhile, in contrast to the sluggish performance of the gaming division, Microsoft's overall results showed strong growth. Total revenue for last year reached $81.3 billion (approximately 116.25 trillion KRW), an increase of 16.7% year-on-year, while operating income rose by 21% to $38.3 billion (54.76 trillion KRW).