Xbox Series X|S and Game Pass Help Microsoft Generate Record-Breaking Revenue

Published 04/28/2021, 9:03 AM EDT


The last few months have been extremely giving for Microsoft. Ever since the company launched a new generation of Xbox consoles in November 2020, it has only seen profits. The launch of Xbox Series X|S has also pushed the sales of the Game Pass, making the subscription service even more popular.

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Microsoft first started posting revenue figures for the gaming division 6 years ago. Since then, the company has launched 2 generations of consoles along with various content and subscription services. Interestingly, figures following the conclusion of the first quarter of 2021 reveal interesting patterns.

Xbox posted a record $3.53bn in revenue, its highest ever Q1 revenue since it started making the figures public. Breaking this number down, industry insider Daniel Ahmad informed that the hardware revenue skyrocketed by 232% due to the launch of Series X|S. Moreover, even the content and services revenue, which includes the game pass, exclusives, and third-party games, was up by 32%.

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ALSO READ: Report: Xbox Game Pass Might Make Its Way To Steam

Xbox content and services more profitable than hardware

The massive rise in hardware revenue is clearly due to the launch of the Series X|S consoles. However, even that 232% YoY accounts only for 20% of the total Q1 revenue. It is the content and services that comprise 80% of the total revenue of Microsoft’s gaming division. Clearly, Microsoft wants the Game Pass to be at the epicenter of its gaming division.

A pair of Microsoft home video game consoles, including an Xbox Series S (L) and Xbox Series X, taken on October 27, 2020. (Photo by Phil Barker/Future Publishing via Getty Images)

Whether it is the xCloud service, PC gaming, or consoles, Xbox sees the subscription-based service as a revenue goldmine. Moreover, as Microsoft continues to acquire studios like Bethesda, its ability to offer content keeps on increasing. More exclusive titles or third-party services make gaming with Microsoft more lucrative than ever.

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The sales for Xbox Series X|S have been decent since their launch. However, the limited supply of the console and the manufacturing difficulties due to the pandemic could have been a major reason behind the low revenue contribution on the hardware end.

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Clearly, the pandemic helped the sales of the game pass along with other content and services. With people spending most of their time inside, gaming has been a lucrative choice. Fortunately for Xbox, this meant a 50% YoY revenue growth since the last quarter.

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Shwetang Parthsarthy

737 articles

Shwetang Parthsarthy is an eSports author at EssentiallySports. His love for arguments and games has led him down two paths: being a law student and writing about the world of gaming since 2017. What started as a teenage hobby in the relatively small mobile gaming world with FPS games like Critical Ops and Call of Duty: Mobile, has grown into a professional pursuit with EssentiallySports.

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