Xbox Series X and Xbox Series S has helped propel Microsoft's gaming revenue up by 51%, as it became the company's best ever launch in its history.
Microsoft CEO Satya Nadella made the announcement during the company's conference call with investors that the release of Xbox Series X|S was the "most successful in our history with the most devices ever sold in a launch month."
Xbox Game Pass subscriptions also rose to 18 million, which Microsoft has invested heavily in its subscription service, which offers hundreds of titles for players to download for a monthly fee. All of Microsoft's first party titles hit the service on day one, too, which includes the upcoming Halo Infinite – there are various perks and discounts on offer as well.
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Xbox Game Pass Ultimate, which is the premium tier of Xbox Game Pass, also includes xCloud, Microsoft’s cloud gaming service which is available on Android and iOS, with a PC release on the way.
This means the Xbox ecosystem is no longer tied to just console or PC, and it opens up a whole new audience for Microsoft to target. The company’s Xbox content and services revenue increased by 40% compared to the same quarter last year.
Speaking at Microsoft’s full earnings call, Microsoft CEO Satya Nadella highlighted the significance of xCloud, and in turn, Xbox Game Pass.
“On xCloud, it's very early days, but we are very excited about fundamentally the expansion opportunity it provides,” Nadella said. “So the service today really allows us to take our catalog and not be limited to any of the traditional endpoints in particular the console and the PC, and expand beyond that.
“So as you can imagine that I think from a reach perspective is very exciting to us and the fact that we now have a technology solution to do so we are in the very early innings of it, while at the same time ensuring that we are doing a fantastic job for all our console gamers and PC gamers is going to be how we'll approach the value of our subscriptions.”
Service charge
Despite a clear focus on its subscriptions and services, Microsoft also saw hardware revenue grow by 86% thanks to the release of Xbox Series X and Xbox Series S. And even though both consoles continue to be held back by stock issues, it’s clear that hardware is only part of Microsoft’s strategy.
As we mused back in July 2020, Microsoft doesn’t really care if you buy Xbox Series X. Sure, it’s great if you do, but over the last few years the company has hedged its bets by making Xbox games and services available on more platforms. And it appears that approach is paying off.
Not only does Microsoft have a high-end and cheaper console on the market, but Xbox Game Pass is also available on PC and mobile devices. It ultimately gives consumers more choice, and doesn’t force people to stump up $499 / £449 / AU$749 on a console simply to experience one or two games.
Microsoft nearly undid a lot of its hard work of making Xbox Series X a great value proposition after a considerably Xbox Live Gold price hike, which many speculated was to push more people to Xbox Game Pass. However, the company quickly reverted this decision, much to relief of gamers around the globe
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