Microsoft’s Xbox and gaming sales decline 9% on eve of Xbox One S release

Microsoft’s gaming division is in a slump, and it’s hoping to claw its way out with new hardware coming in August.

Xbox and gaming revenue for Microsoft decreased $152 million during its fiscal fourth quarter. That’s a 9 percent year-over-year decline for the three-month period from April through June. Microsoft points to a decline in consoles sold and a lower average price for the Xbox One as the big reason. That includes some declines for the aging Xbox 360, but the Xbox One is the biggest factor for Microsoft at this time. Console gaming a huge part of the $99.6 billion worldwide gaming industry, but Microsoft is looking to take it on by also combining that segment with its PC-gaming efforts. The company is also planning to launch the slimmer Xbox One S starting at $300 early next month after announcing it in mid-June.

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Xbox One is trailing the PlayStation 4 in terms of sales. In the United States alone, Sony’s console has outsold its Microsoft counterpart every month since October. But even while Xbox One is behind, Sony Interactive Entertainment is looking at ways to boost its consoles sales. That’s why the company is preparing to release an upgraded PlayStation 4 called Neo sometime soon.

While Microsoft’s overall gaming business is on the decline, the company is squeezing more from its services. Xbox Live monthly active gamers grew to 49 million, which is a 33 percent year-over-year increase. That led to a 4 percent increase in revenue from Xbox Live. Microsoft says that a higher volume of transactions and higher revenue per transaction led that growth.

“Excitement for new games on Xbox One and Windows 10 led to a nearly 13 percent sequential increase in hours spent on gaming on Xbox One and a nearly 19 percent sequential increase in hours gaming on Windows 10 PC,” reads Microsoft’s press release.

Across all of its businesses, Microsoft was down 4 percent year-over-year, and it points to Xbox One as one of the reasons for that decline.