The latest financial report from Microsoft has been shared and in this information, pertaining to Q3 2026, it's become clear that Xbox is facing a bit of a downward trend from a financial perspective.
The data shows that Xbox is down across the board, with content and services revenue falling by 5% while gaming revenue also slumps by 7%. This is only worsened by a whopping drop in hardware revenue amounting to 33%.
It should be said that while this looks poor in writing, Microsoft did expect revenue decline in this quarter, but not quite as much as has been reported. This is something that Microsoft CFO Amy Hood has spoken about in the accompanying earnings call, explaining the following.
"In Xbox content and services we expect revenue to decline in the low teens. Reflecting a prior year comparable that benefited from strong first party content as well as the recent price changes for Xbox Game Pass, as we focus on delivering more value to gamers. Hardware revenue should decline year over year."
Xbox CEO Asha Sharma has since spoken up about this data too, noting that there is "work to do" even despite the progress that has been made.
"Xbox earnings today. While we have made progress expanding the business and our margins, player and revenue growth has not yet met our ambition. We know we have work to do to earn every player today and into the future."
It should also be noted that Microsoft expects certain major declines in revenue, especially on the hardware front as Xbox Series X/S are set to celebrate their sixth birthdays this year. Likewise, even with this less than desirable picture in mind, Microsoft boss Satya Nadella did note that over the period Xbox set "monthly records" in regards to active users and game streaming hours from the Xbox division.
