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Hardware remained a driving force for Microsoft’s gaming division. The company reported 2022’s first-quarter earnings today, revealing a revenue increase of 16% over the same period from the previous year. Xbox content and services like Game Pass grew 2% year-over-year, and that contributed to the overall growth for the gaming segment. Hardware sales, however, drove the majority of the increase.
“Xbox hardware revenue grew 166% driven by continued demand for Xbox Series X/S on a low prior year comparable,” reads the Microsoft earnings report. “Xbox content and services revenue grew 2% … with growth in Xbox Game Pass subscriptions and first-party titles partially offset by declines from third-party titles.”
The Xbox Series X/S consoles launched in November 2020 and were impacted by industry wide shortages from manufacturing and shipping issues created by the ongoing Covid-19 pandemic. The lack of available hardware combined with consumers remaining indoors means that consoles continue to sell as fast as they hit the shelves. Microsoft’s Executive Vice-President of Gaming Phil Spencer told The Wrap he expected shortages to continue into 2022.
First party games like Hellblade: Senua’s Sacrifice, Microsoft Flight Simulator, and The Elder Scrolls Online have kept engagement high for Game Pass. And that engagement will likely gain momentum with Halo Infinite and Forza Horizon 5 scheduled for release later this year. While there are no updated numbers for Game Pass subscriptions, analyst estimates put the number somewhere around twenty million.
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As supply bottlenecks ease and with flagship titles coming soon, Microsoft may be looking at as solid a second-quarter as it reported a first-quarter.