Xbox revenues expected to drop up to 9% due to console supply issues

Microsoft expects gaming to drop in Q4 and break Xbox's quarterly growth streak.

2

Xbox is currently dominating the market. Microsoft took over market share in key territories through January - March 2022. Console revenues are up 14% due to a supply surge, and Xbox Series X/S were the best-selling consoles in March 2022. Xbox just delivered another record-breaking quarter with $3.74 billion in Q3, which was the highest Q3 period in Xbox gaming history. Xbox has actually made record revenues for three straight consecutive quarters in a row.

Q4 2022 is a different story. Microsoft expects Xbox gaming revenues to drop as much as 9% through the quarter from April - June 2022, breaking the three-month growth streak.

The main drivers for the drop are constrained console supply due to manufacturing interruptions in China as well as lower engagement and spending values in content and services.

"We expect gaming to decline mid to high to single digits driven by lower engagement hours year over year as well as supply constraints," Microsoft Chief Financial Officer Amy Hood said in a Q3 earnings call.

"We expect content & services revenue to decline to mid single digits, but engagement is expected to be higher than pre-pandemic levels."

So what does this forecasted drop look like against other quarters?

We've charted the highest possible single-digit drop (-9%) which indicates revenues of roughly $3.38 billion.

2