Microsoft Corporation's (NASDAQ:MSFT) gaming revenue grew 11% on a year-over-year basis in the fourth quarter.
What Happened: The Satya Nadella-led company’s gaming division raked in $357 million in revenue in the quarter ended June 30.
Hardware sales brought in more revenue thanks to higher-priced new era consoles. “Xbox hardware revenue increased 172% driven by higher price and volume of consoles sold due to the Xbox Series X/S launches,” as per the company’s earnings release.
Content and services revenue cooled off in 2021 as more people turned away from third-party titles.
Xbox content and services revenue dropped 4% lower to $128 million, which Microsoft attributed to a decline in third-party titles compared to last year that benefited from pandemic-induced stay-at-home scenarios.
The tech giant noted this slump was "offset in part by growth in Xbox Game Pass subscriptions and first-party titles."
CEO Nadella said at the company’s earnings call, “Game Pass is growing rapidly and it’s transforming how people discover, connect and play games. Subscribers play approximately 40% more games and spend 50% more than nonmembers.”
Why It Matters: “Gaming is the largest category in the entertainment industry,” Nadella said in the earnings call — adding, “we are expanding our opportunity to reach the world’s 3 billion gamers wherever and whenever they play. We are all in on games.”
The opportunities in gaming have attracted debutants like Netflix Inc (NASDAQ:NFLX), which said last week it will offer video games in its existing subscription plans at no extra costs to consumers.
Other tech giants that have exposure to gaming include Alphabet Inc (NASDAQ:GOOGL) (NASDAQ:GOOG), Facebook Inc (NASDAQ:FB), Apple Inc (NASDAQ:AAPL), and Amazon.com, Inc (NASDAQ:AMZN).
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