Microsoft’s gaming revenue declines 7% in June 30 quarter

Microsoft revealed in its earnings report today that its gaming revenue declined 7% (5% in constant currency) in the fourth fiscal quarter ended June 30, compared to a year ago.

Xbox content and service revenue declined 6% (4% in constant currency), driven by lower engagement hours and monetization in third-party and first-party content. It was partially offset by growth in Xbox Game Pass subscriptions.

And Microsoft said that Xbox hardware revenue declined 11% (down 8% in constant currency). The overall division that includes gaming saw its operating income slip in the June quarter from $4.8 billion a year ago to $4.6 billion in the most recent quarter, but revenues grew from $14.1 billion a year ago to $14.3 billion.

The More Personal Computing division includes gaming, including Xbox hardware and Xbox content and services, Xbox Game Pass and other subscriptions, video games, third-party video game royalties, cloud services and advertising.

Microsoft chief financial officer Amy Hood said in an analyst call that the results do not include anything from Activision Blizzard, which Microsoft is in the process of buying for $68.5 billion. She said she still expects that deal to close in the current fiscal year. Hood said gaming revenue was in line with expectations.

Revenue for the More Personal Computing division is expected to grow 1% to 4% in constant currency, or $13 billion to $13.4 billion. Gaming is expected to decline in the low-to-mid single digits, driven by a decline in first-party title launches. That will be offset by growth in Xbox Game Pass, Hood said.