Microsoft’s latest earnings show Xbox doing pretty well at everything except selling Xboxes

Xbox is still boosting revenue for Microsoft, no thanks to the actual Xbox.

In its most recent earnings report covering its fiscal year, which ended in June, gaming looked pretty rosy for Microsoft. The tech giant said its annual gaming revenue climbed to $23.45 billion, up 9% from last year. About $5 billion of that was from its subscription service, Game Pass (a record). In its fiscal fourth quarter, Microsoft reported that it was the top game publisher on both Xbox and Sony PlayStation consoles.

The only real gaming-related shortcoming for Xbox was, well, the Xbox itself.

Microsoft’s gaming hardware revenue, which includes sales of the Xbox Series X and S consoles, fell 25% this fiscal year. That’s worse than the drops in fiscal 2024 (13%), 2023 (11%), and 2022 (16%). This comes despite Microsoft’s tariff-proofing move of hiking the prices of its consoles in May.

In its most recently reported quarter, Sony said it’s sold 77.8 million PlayStation 5s over the lifetime of the console. While Microsoft hasn’t released Xbox unit sales figures for about a decade, many estimates place the combined lifetime sales of the Series X and S at roughly half that.

These figures are likely behind Microsoft’s strategy of late to shift the public’s perception of what Xbox actually is, from a console that competes with Sony and Nintendo to a gaming platform stretching across handhelds, PCs, phones, and the cloud.

“This is all about building a gaming platform that’s always with you, so you can play the games you want across devices anywhere you want — delivering you an Xbox experience not locked to a single store or tied to one device,” Xbox President Sarah Bond said in a video posted last month about the company’s next generation.

If those plans come to fruition, Xbox would be pivoting out of its rivalry with Sony (which it’s losing) and into competition with platforms like Steam.