Microsoft published the financials for the fourth quarter of its 2023 fiscal year, confirming a record number of monthly Xbox users, in addition to revealing some impressive sales figures, among other things. While Microsoft claimed that Xbox lost the console wars as recently as June, these new insights into its financial performance indicate that its gaming division is still enjoying steady growth.

The tech giant spent the majority of this year downplaying the success of its Xbox business as part of a strategy to push the Activision Blizzard acquisition over the finish line. Those efforts have most recently culminated in Microsoft revealing the Xbox Series X/S sales numbers, thus breaking with a nearly decade-long tradition of not doing so.

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While the Xbox company's newly published financials did not offer a comparably detailed overview of its console sales, they provided new insights into the company's gaming division, which just concluded its second-best fourth quarter on record. Namely, Microsoft's gaming business recorded approximately $3.49 billion in sales over the three-month period ending June 30, a $36 million year-on-year increase. The tech giant attributed the 1% uptick to new third-party game releases and Xbox Game Pass, whose quarterly hours played rose by 22%. Overall, Xbox reached new heights in terms of fourth-quarter monthly active users, Microsoft said, without attaching a concrete figure to that claim.

The company managed its 1% improvement in quarterly gaming turnover in spite of a 13% drop in hardware revenue during the same period. But given how Xbox boss Phil Spencer recently said he's not too worried about console sales, this decline is unlikely to warrant any big changes at Microsoft. An industry analyst who goes by DomsPlaying on Twitter estimated that the conglomerate's total gaming revenue for the full fiscal year amounted to $15.47 billion, a $760 million decrease compared to the pandemic-propped 2022.

Microsoft's minor quarterly gaming growth managed to partially offset its personal computing division's declining growth margin, the difference in revenue and direct costs, which dropped by 2% ($124 million) during the observed period. It also helped the business bolster its operating income by $186 million, a 4% increase compared to the final quarter of its 2022 fiscal year.

Moving forward, Microsoft said it has high hopes for Xbox Game Pass Core, a freshly announced replacement for Xbox Live Gold. The company expects that the upcoming service will boost its console subscriptions by significantly increasing the value proposition of Xbox Live Gold, thus also providing users with a more meaningful glimpse at some of the perks of the more expensive Xbox Game Pass Ultimate tier, including its massive content library and frequent member discounts.

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Source: Microsoft 1, 2 (DOCX)