Xbox Revenue Falls 7% in FY26 as Player Base Grows

Microsoft's Xbox division reported a significant decline in revenue for its 2026 fiscal year, even as it attracted over 200 million new players, highlighting a stark disconnect between audience growth and financial performance. The company's latest earnings report, covering the period through June 2026, showed gaming revenue fell 7 percent for the full year, with a sharper 10 percent drop in content and services revenue and a 13 percent decline in hardware sales for the fourth quarter alone.

The results cap a difficult year for the gaming unit, which has been undergoing a major reset under new CEO Asha Sharma. In July, Microsoft cut 4,800 jobs across the company, including 3,200 within the Xbox division, and spun off four internal studios. These moves were part of a broader strategy to streamline operations and focus resources. Sharma stated that while the player base expanded, the business did not grow with its audience, creating a gap the company aims to close.

A primary driver of the revenue decline was a 29 percent drop in annual hardware revenue, attributed to selling fewer consoles. In response, Microsoft announced it will raise console prices by up to $150 starting August...