Xbox Faces Financial Losses Despite Reaching Over 200 Million New Players

Microsoft's fiscal year 2026 results, ending June 30th, reveal that Xbox has experienced a downturn. Both hardware and software sales saw a decrease of 5% and 29% respectively compared to the previous year. This marks the fourth consecutive quarter of decline for Xbox, a trend not seen since 2020.

These figures are not entirely surprising, even to Microsoft. CFO Amy Hood had previously hinted at these results when discussing Q4 2026 earnings. The company's expenses have also risen, partly due to recent restructuring within Xbox, which includes staff reductions and the divestment of some recently acquired studios as part of a reset for FY27.

Despite these declines, often referred to as negative growth, Xbox is not in dire straits. The division continues to generate billions of dollars in revenue, although the profit margins Microsoft aims for remain elusive.

Asha Sharma, CEO of Xbox, has expressed optimism, anticipating a return to growth by the end of fiscal year 2027. She highlighted the influx of "over 200 million new players" who have engaged with Xbox and its games during the fiscal year that concluded on June 30th. However, it's challenging to ascertain the exact origin of these "new players" – whether they stem from games like Candy Crush, incidental installations of the Xbox Game Bar on Windows, or major releases like Forza Horizon 6.

This is not the first time Sharma has cited large, potentially ambiguous figures. Following recent layoffs, she suggested an aim for Xbox, broadly defined, to reach "over a billion people every day." Even considering the significant contribution of Candy Crush to Xbox's future strategy, reaching a billion daily users remains an ambitious target for any company.

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