Microsoft’s Game Pass success boosts revenue despite sluggish Xbox One sales

Microsoft’s Netflix-for-gaming program Game Pass had a strong fiscal Q1 2018 along with the company’s other Xbox services. Revenue from gaming software and services saw a jump year-over-year for Microsoft during the three-month period that ended September 30. These sales helped overcome a slump in the number of Xbox One systems Microsoft sold during that same period.

“Xbox software and services revenue grew 21 percent driven by continued momentum in digital distribution and strong game title performance,” reads Microsoft’s quarterly report.

Overall, Microsoft’s gaming division revenue grew 1 percent compared to the same quarter from last year. The company is preparing to release the Xbox One X on November 7, and some fans are likely holding off on big hardware purchases until they can get that system or until they see a price cut. At the same time, Nintendo Switch and PlayStation 4 continue to sell well and distract consumers from the Xbox platform.

But the Xbox division cares less about hardware sales these days, and it is much more focused on getting people into the overarching Xbox Live ecosystem.

“Xbox Live monthly active users grew 13 percent to 53 million,” reads the Microsoft report. “With continued growth across Xbox One, Windows 10, and mobile platforms.”

Microsoft is showing that it can generate increased revenues through services, so it doesn’t mind if you get on Xbox Live through your PC without even owning an Xbox One. On mobile, Microsoft is using Xbox Live as the backbone for some of its Minecraft services, and that game will continue to generate revenue as developer Mojang introduces more features to shift it to a service-based business model.