Earlier today, Microsoft shared its earnings results Q3 FY2026, covering for the period between 1st January and 31st March. Microsoft’s revenue is up 18 percent, at $82.9bn, though gaming revenue fell seven percent. Xbox content and services also saw a drop of five percent year on year. Microsoft attributed this to “a prior year comparable that benefited from strong first-party performance”.
Meanwhile, Xbox hardware revenue dropped 33 percent. This follows a price rise for Xbox Series X/S consoles in the US towards the end of last year, the consoles’ second in six months. In November, Microsoft said this price increase was due to “changes in the macroeconomic environment”. Despite this, Microsoft CEO Satya Nadella said the company had “set new records for monthly Xbox active users in the quarter, as well as game streaming hours”.
Writing on social media platform X, Microsoft’s newly-appointed Xbox boss Asha Sharma said “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”. Nadella also affirmed Xbox will be “recommitting to [its] core fans”.
Said Nadella: “When it comes to our consumer business, we’re doing the foundational work required to win back fans and strengthen engagement across Windows, Xbox, Bing, and Edge. In the near term we are focused on fundamentals, prioritising quality and serving our core users better. You see this in the work underway across our consumer products. With Windows, we recently announced performance improvements for lower memory devices, streamlined the Windows Update experience, and brought back focus to core features and fundamentals that matter most to our customers. And you also see this in Xbox, where the team is recommitting to our core fans and players and shaping the future of play.
“Last week’s Game Pass changes are one example of how we are staying responsive to customer feedback. Monthly Active Windows devices surpassed 1.6 billion… Bing monthly active users reached one billion for the first time.”
Earlier this month, Microsoft dropped the price of Xbox Game Pass Ultimate. In the US, the price went from $29.99 per month to $22.99 per month, while PC Game Pass was reduced from $16.49 per month to $13.99 per month. For UK subscribers, Game Pass Ultimate changed from £22.99 per month to £16.99 per month. PC Game Pass, which was £13.49 per month, dropped down to £10.99 per month.
These Game Pass changes are one of the most significant improvements Sharma has implemented since taking on her new role at Xbox. The newly-appointed exec has also scrapped the “This is an Xbox” campaign, and started pointing attention to the next generation of Xbox hardware, so far known only as Project Helix. This hardware will “lead in performance”, Sharma said, though when exactly we will see it remains something of a mystery.
As Sharma continues work on fixing the Xbox brand image, there is a growing call from the BDS movement to boycott the gaming platform due to parent company Microsoft’s reported complicity in Israeli war crimes against the Palestinian population and state.
