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Microsoft Q2: Xbox division revenues down 11%

Friday, 25th January 2013 00:57 GMT By Brenna Hillier

Microsoft reported revenue of $21.46 billion for the second quarter, up 3% year-on-year, but its Entertainment and Devices Division was not so successful.

Microsoft’s Xbox business is part of the Entertainment and Devices Division, which reported an 11% year-on-year decrease in revenues from $4.24 billion to $3.77 billion. Although Xbox isn’t the only business stream in the division, Microsoft made it clear the console was to blame.

“Xbox 360 platform revenue decreased $1.1 billion or 29%, due mainly to lower volumes of consoles sold and lower video game revenue, offset in part by higher Xbox LIVE revenue,” a statement offered.

5.9 million Xbox 360 consoles shipped during the quarter, down from 8.2 million in the same quarter of FY 2012. Video game revenue was down overall, but Microsoft said it had deferred $380 million in revenue.

That said, the division remained profitable and even improved performance, with operating income of $596 million, up from $517 million in the same quarter a year ago.

Interestingly, Microsoft noted “lower cost of revenue and sales and marketing expenses”; you’ll note it hasn’t thrown much weight behind Gears of War: Judgment, for example, and has dropped its Xbox marketing spend by 21% or $92 million.

It did, however, make note of “increased research and development expenses” in the Entertainment and Devices Division – up 25% or $98 million. It reads like Microsoft has begun to shift focus from marketing current generation games and hardware to strategising for the next generation.

Overall, Microsoft reported a quarterly profit of $6.38 billion.

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12 Comments

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  1. woe

    Xbox division? now your just trolling for hits.

    #1 1 year ago
  2. Mike W

    So they did good….right?

    #2 1 year ago
  3. Night Hunter

    @Mike W: Who the fuck knows in this day and age. Maybe their overall profit fell by 1 Cent so their Shares went down 50%. I hate the modern stock exchange system …

    #3 1 year ago
  4. Psychotext

    $600m in net income for the quarter can’t be sneezed at. Was a good quarter for sure.

    Insane to think that the 360 is now in its 8th year.

    #4 1 year ago
  5. DSB

    @4 Sure, assuming you started with zero.

    That’s not the case though. Microsoft spends an awful lot of money on their gaming division without making very much.

    I don’t remember the exact numbers, but I think they’re spending something like 8 or 9 billion to make one billion in profit on a good year.

    In comparison, the profit and expense they have on Windows is a lot closer to 1 to 1.

    Like Night Hunter says the stock market is a weird place. People may like one billion well enough, but they’d sure like five billion more.

    #5 1 year ago
  6. ps3fanboy

    mickey$oft crapbox can’t compete with the ps3 in the long run HAHAHA!

    #6 1 year ago
  7. Night Hunter

    “Like Night Hunter says the stock market is a weird place. People may like one billion well enough, but they’d sure like five billion more.”

    That’s not the problem. The problem is if they are profitable but they were even more profitable the year before they loose confidence from investors. Doesn’t matter if they made 1 cent or 10 billion dollars. It isn’t enough anymore to just make a shitload of money. You allways have to make more money! ;)

    #7 1 year ago
  8. Psychotext

    @DSB: I’m struggling to see why that makes a difference. Profit is profit. Sure, to the stock market, but as a general rule they’re a bunch of window licking greed monsters.

    At the end of the day, the 360 is easily is in the black since the release. That might not please the stock market, but it’s a long, long way removed from the bad old days of the original xbox (which cost them about $5bn).

    #8 1 year ago
  9. livewired500

    @5 It’s all here: http://www.microsoft.com/investor/EarningsAndFinancials/Earnings/PressReleaseAndWebcast/FY13/Q2/default.aspx

    Actually, Windows Division operating margin is about 56%. Entertainment and Devices Division came in a 15%, which is low but up from last year by 3%.

    #9 1 year ago
  10. DSB

    @8 That’s obviously true, it’s all in the perspective, and I’m sure they do appreciate those billions.

    At the end of the day the window licking greed monsters are not without influence, but obviously Microsoft have done well in terms of marketshare.

    @9 Keep in mind you’re looking at quarterly info from the busiest quarter of the year – Xmas. The complete data from the last two years looks quite different.

    http://www.microsoft.com/investor/reports/ar11/financial_review/discussion_analysis.html

    http://www.microsoft.com/investor/reports/ar10/10k_fr_dis.html

    #10 1 year ago
  11. The_Red

    The suits want to see Xbox sales climb, 6-7 years after launch… Yeah. This is what you get when you stretch a console cycle WAY beyond its capacity.
    Now I’m not asking for a stupid Apple model with 6-7 month updates but seriously, 360 (And the rest of this console gen) is way past the “too old” age and half way within “long dead”.

    #11 1 year ago
  12. woe

    @Mike W -T he EDD made around 600 million USD profit, also shipping 5.9 million in one quarter in its 8 year is damn impressive, so yeah it did good.

    #12 1 year ago