Xbox Says It Can't Make Enough Consoles. Its Console Revenue Fell 14% Anyway
Microsoft's latest numbers have Xbox down 2% and hardware down 14%. Xbox's boss says there's more demand than consoles, but nobody will show the number.
Xbox hardware revenue fell another 14% last quarter, and the head of Xbox says the reason is that there aren’t enough consoles to sell. It’s a strange thing to read about a console that’s been out for six years.
Microsoft reported its results on the 28th of October, for the three months up to the end of September. Xbox as a whole brought in $5.38 billion, down from $5.51 billion a year earlier. That’s $129 million less, or about 2%.
Where it went
Here’s what Microsoft’s own filing says.
| Change on last year | What Microsoft says drove it | |
|---|---|---|
| All of Xbox | Down 2% | Falls in both content and services and hardware |
| Content and services | Down 2% | Less third-party content and Xbox Game Pass, partly offset by more first-party content |
| Hardware | Down 14% | Fewer consoles sold |
A 14% drop looks bad until you remember that the same quarter last year was down 29%, so it’s at least falling more slowly.
The line I’d look at is Game Pass, because Microsoft has named it as a reason revenue went down. Game Pass is supposed to be the whole plan. If the hardware is shrinking and the subscription is shrinking, that plan has a problem, and first-party games are doing the work to cover it.
The supply thing
Asha Sharma, who runs Xbox, posted about the numbers the same day. The post pointed out that revenue fell 2%, compared with a 10% fall the quarter before, and said “Console sales remain constrained by supply, with more demand than consoles available.”
That’s the bit I can’t check, and neither can you. Microsoft doesn’t publish how many consoles it sells. “Fewer consoles sold” fits with not having enough to sell. It also fits with fewer people wanting one. Sharma is saying it’s the first, and the head of Xbox would know, but the filing only tells you the number went down.
I’ve got a Series X, so I’m not exactly the target market for another one. I’d just like to see where all these people are who can’t get one.
What comes next
Amy Hood, Microsoft’s chief financial officer, said on the earnings call that content and services should grow in the mid to high single digits in the current quarter, helped by when games are launching, and that growth should slow after Christmas. Hardware is expected to fall again.
So Christmas is forecast to be good for Xbox games and bad for Xbox boxes, which sums up the last few years pretty well.
Lovely shtuff lad.
Sources
- Microsoft: Form 10-Q for the quarter ended 30 September 2026 and FY27 Q1 results.
- Microsoft: FY26 Q1 results, for last year’s 29%.
- Pure Xbox: Sharma’s statement.
- 4Scarrs Gaming: Hood’s outlook, and Tom Warren on X. I couldn’t check the wording against a full transcript.
