Microsoft has some catching up to do: Xbox and gaming revenue fell 9 percent year-over-year in the second quarter of 2016, the company revealed in its latest earnings statement.
With the imminent release of the Xbox One S, it seems that gamers are holding out on investing in the Xbox ecosystem.
Microsoft is attributing the decrease in revenue to declining console purchases and the cheaper price of the current Xbox One. This equated to a $152 million decrease during its fiscal fourth quarter. Microsoft could be aiming to liquidate current stock as the slimmer Xbox One S is about to hit stores. During E3, Microsoft also unveiled Project Scorpio, a new, more powerful and VR-capable console that’s set to launch sometime next year. This too could also be the reason why some are waiting to buy a new system.
The Xbox One has seen a troubled life. While outpacing its predecessor, the Xbox 360, in sales, the Xbox One has had some marketing gaffes. Most notably, the launch edition of the Xbox One was $100 more expensive than Sony’s PlayStation 4 and came bundled with Kinect. The motion tracking accessory failed to capture imaginations, and Microsoft quickly dropped it from the system.
Microsoft has since been on a laser-focused course to win back the hearts and minds of gamers. Now that Phil Spencer is heading Xbox, Microsoft’s recent E3 press conference was all about the games. Microsoft also made a strong push to expand into PC gaming in Xbox Play Anywhere. It announced that a slew of first-party titles would be coming to PC. With that, Microsoft will also enable cross-buy, meaning that if gamers purchase a copy of a game on Xbox One (digitally) it too will be available on PC. This announcement caught the ire of those deeply entrenched in the console war, but saw unanimous praise from the larger gaming audience.
Even with the recent dip in sales, Microsoft seems to playing the long game.