Financial Results for 2023

• Revenue in Microsoft's gaming sector decreased by $764 million or 5% in 2023.
• This decline was mainly due to decreases in Xbox hardware and Xbox content and services revenue.
• Xbox hardware revenue fell by 11%, due to lower sales volumes and prices of consoles.
• Revenue from Xbox content and services decreased by 3%, due to a decline in first-party content, partially offset by growth in Xbox Game Pass​.

Highlights of Fiscal Year 2023 Compared to the Previous Year

• Revenue from Microsoft Cloud increased by 22% to $111.6 billion.
• Revenue from Office Commercial products and cloud services increased by 10%, driven by a 13% growth in Office 365 Commercial.
• Revenue from Office Consumer products and cloud services increased by 2%.
  The number of Microsoft 365 Consumer subscribers rose to 67.0 million.
• Revenue from LinkedIn increased by 10%.
• Revenue from Dynamics products and cloud services increased by 16%, driven by a 24% growth in Dynamics 365.
• Revenue from server products and cloud services increased by 19%, driven by a 29% growth in Azure and other cloud services.
• Revenue from Windows Original Equipment Manufacturer licenses (“Windows OEM”) decreased by 25%.
• Revenue from Devices decreased by 24%.
• Revenue from Windows Commercial products and cloud services increased by 5%.
• Revenue from Xbox content and services decreased by 3%.
• Revenue from Search and news advertising, excluding traffic acquisition costs, increased by 11%.

Outlook for 2024

• For the first quarter of fiscal year 2024, Microsoft expects record revenues in its Xbox gaming division.
• An increase in total revenue of "mid-single-digit percentages" compared to the first quarter of fiscal year 2023 is projected, which could correspond to a possible increase to about $3.791 billion.
• This growth is expected to be driven mainly by the content and services sector.
• Despite the financial upswing in the services sector, Xbox hardware revenue decreased by 7%​.
• A key factor in this positive development was the launch of "Starfield" by Bethesda Softworks, LLC, which was able to stimulate significant sign-ups for Game Pass as well as game sales through Xbox, Steam, and the Microsoft Store, leading to a 13% increase in Xbox content and services compared to the previous year.

Successful Launch of Starfield

"Starfield" was released in September 2023 and reached 10 million players within a few weeks of its release. This number rose to over 11 million players by the time of Microsoft's financial reporting, making it the biggest launch in Bethesda's history.

Future Prospects

The acquisition of Activision Blizzard by Microsoft is expected to have a significant impact on future revenues, with the full effects of this acquisition becoming visible in the coming quarters. For the second quarter of 2024, which also includes the Christmas quarter of 2023, game revenue is expected to increase by about 45% to 49% compared to the previous year​.

Sources

Microsoft Annual Report 2023  
Gameinformer.com