Microsoft Is “Well-Positioned” in What Is Going to Be a Much Larger Gaming Market According to CEO

During Microsoft’s quarterly financial conference call for investors and analysts, Chief Executive Officer Satya Nadella and Chief Financial Officer Amy Hood talked about the company’s gaming business.

Nadella talked about Project xCloud, and boasted the fact that Xbox Live now counts the highest number of PC and mobile users to date.

He also mentioned that the studio acquisitions aim to deliver differentiated content for subscription services like Xbox Game Pass.

“We’re investing to empower the world’s two billion gamers to play the games they want with anyone, anywhere, on any device with our new game streaming service, Project xCloud which will enter public trials this fall.

Xbox Live monthly active users increased to a record 65 million with the highest number of mobile and PC users to date

We’re bringing one of the the world’s most popular video games to a new generation of mobile gamers with Minecraft Earth and mixed reality, and we nearly doubled our first-party studios this year to deliver differentiate content for our fast-growing subscription services like Xbox Game Pass, now available both on consoles and PC.”

Later in the call, Nadella was asked to elaborate on Microsoft’s position in gaming.

“First, I’ll say we are in gaming because of what we believe are going to be the secular changes in the gaming addressable market for us. We’ve always had a gaming position with console as well as the PC, but going forward we think that any end point can in fact be a great end point for high-end games, which is where our structural position is, and we now have a business model with Game Pass as well as all the supporting mechanisms for game pass like game streaming, we have a social network in Xbox Live that is the best in the business.

So I feel we’re well-positioned to what is going to be a much larger market than what was traditionally gaming in spite of all the success we’ve had over the years in gaming.

The second point is that it builds on the rest of the cloud investment, so if you think about what we’re doing with xCloud it’s a workload on top of Azure. If you think about capital allocation, what’s happening in the cloud, what’s happening in the edge, how we build the network, how we optimize with streaming… The same infrastructure for example is what Sony has decided to use as well and be on Azure as well as user AI capabilities.

So you’ll see significant synergies in terms of the architecture of platform underneath gaming, Microsoft 365, Dynamics 365, and Linkedin all being the same.”

Chief Financial Officer Amy Hood admitted that the performance of the gaming business in the past quarter was “lower than expected.”

She also talked about the outlook for the current quarter, which ends on September 30.

“In gaming, we expect gaming to decline year over year in similar rate to Q4, as we move through the end of this console generation and a changing Xbox services and software comparable from a third-party title in the previous year.”

Lastly, she explained the outlook for the full fiscal year ending on March 31, 2029, mentioning that the company expects a stronger second half of the year compared to the first half.

“We expect revenue in our gaming business to be down slightly year over year as double-digit growth in Xbox software and services will be offset by decline in console sales. We do expect a stronger H2 than H1 in gaming, as we work through our third-party title comparison.”

If you want to hear more about Microsoft’s latest financial results and the performance of its gaming business, you can check out our dedicated article from earlier today.