adminMicrosoft gaming revenue Q2 figures show a year-on-year decline, with the company pointing to weaker first-party content performance and lower console sales. For the three months ended December 31, 2025, gaming revenue was $623 million, while both Xbox content and services and hardware recorded declines.
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Microsoft gaming revenue Q2: the reported figures
Microsoft reported the following year-on-year changes for the quarter:
- Gaming revenue: $623 million, down 9%.
- Xbox content and services revenue: Down 5%; Microsoft did not disclose the dollar amount.
- Xbox hardware revenue: Down 32%; Microsoft did not disclose the dollar amount.
The figures cover the three months ending December 31, 2025. Because the company did not provide separate dollar totals for content and services or hardware in the reported figures, their percentage changes should not be treated as standalone revenue amounts.
What contributed to the decline?
Microsoft’s 10-Q filing with the US Securities and Exchange Commission attributed the content and services decrease to stronger first-party content performance in the comparable period a year earlier. Chief financial officer Amy Hood also described the results as below expectations and said the shortfall was driven by first-party content.
Microsoft did not identify which specific releases were responsible. Activision, which is part of Microsoft, has changed its release strategy for the Call of Duty series. Player data cited in coverage of the franchise has also indicated a considerable reduction in its player base over the past year, though the company did not name this as the direct cause of the quarterly decline.
Hardware was a separate pressure point: Xbox hardware revenue fell 32% year on year as console sales weakened. When comparing these figures, it is useful to distinguish between revenue from hardware and the broader content and services category, which includes game sales and subscriptions.
Microsoft’s comments and the next-quarter outlook
Chief executive officer Satya Nadella said Microsoft remains committed to offering games across Xbox, PC, cloud and other devices. He also reported record numbers of PC players and record paid streaming hours on Xbox. Those engagement measures provide context, but they do not change the reported revenue declines.
For Q3, the three months ending March 31, 2026, Microsoft expects further year-on-year declines in both Xbox content and services revenue and its hardware business. During Q2, Microsoft released the ROG Xbox Ally, a handheld developed in partnership with Asus. Asus said the device exceeded expectations. Microsoft also confirmed that development of its next-generation hardware is underway.
Xbox Game Studios head Craig Duncan has said the company wants to be more consistent about bringing more titles to PlayStation 5. This reflects Microsoft’s broader effort to make games available across platforms, while the Q3 forecast indicates that near-term revenue comparisons may remain challenging.
What the Microsoft gaming revenue Q2 results mean
The quarter’s results point to pressure across both console hardware and gaming content and services. The key figures to watch in the next report are whether those declines continue, how new releases perform, and whether Microsoft’s multi-platform and handheld strategies support player engagement. The company has not provided dollar totals for the two Xbox subcategories, so their reported percentage changes remain the clearest indicators available here.
