Microsoft is experiencing strong growth in subscription revenue, company CEO Satya Nadella has confirmed.
In a recent earnings call, Microsoft CEO Satya Nadella announced that subscriptions like Xbox Game Pass generated nearly $1 billion in revenue during Microsoft’s third quarter period (January – March 2023). Our data indicates that Xbox Game Pass could account for nearly 1/3, or about 32%, of total Xbox content and services revenue.
Xbox’s content and services segment generated $3.105 billion during the third-quarter period, helping to offset a significant 30% drop in hardware sales. These metrics reinforce the Xbox brand’s focus on subscriptions and content rather than raw hardware and console sales.
It’s worth noting that Nadella’s exact words were “subscriptions,” and not just Game Pass, so this means other subscriptions like standalone EA Play are also included. Game Pass is likely to have formed an overwhelming part of these gains.
No exact updates on Xbox Game Pass subscribers were announced, however Sony had previously indicated that Xbox Game Pass had around 29 million subscribers. Nadella also mentioned that Xbox managed to deliver Q3 records for both monthly active users and daily active devices, however no numbers or figures were provided.
Nadella had previously said that Xbox had 120 million monthly active users, which presumably spans the entire spectrum of Xbox content served on consoles, PCs, and even mobile devices and TVs via direct streaming. One surprising metric Nadella mentioned was that Microsoft now has over 500 million unique users across its line of first-party games, likely driven primarily by Xbox Game Pass subscription access.