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Microsoft (MSFT) Q3 2023 outlook guides for gaming revenue to decline

The company expects gaming revenue to continue to decline in Q3 following a 13 percent decline seen during Q2.

Morgan Shaver

January 24, 2023 3:40 PM

Dado Ruvic, Reuters

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During Microsoft’s (MSFT) earnings call today, it outlined its performance in Q2 2023 while also providing guidance for Q3 2023. Of the many noteworthy forward-looking statements is one where CEO Satya Nadella notes expectations of gaming revenue continuing to decline. The information was shared briefly without much in the way of further elaboration, citing things like how the company has been seeing lower monetization per hour in addition to gaming revenue declining by 13 percent in Q2.

Other details in the report show Xbox content and services revenue declining 12 percent “on a strong prior year comparable, with declines in first-party content and lower monetization in third-party content, partially offset by growth in Xbox Game Pass subscriptions.” Additionally, Xbox hardware revenue declined 13 percent in Q2, with Devices revenue declining 39 percent “driven by continued PC market weakness and execution challenges on new product launches.”

As reported by CNBC, Microsoft (MSFT) shares rose as much as 5 percent in extended trading, but “gave up its gains after the software maker issued lower quarterly revenue guidance than analysts had expected.” Currently, management has called for $50.5 billion to $51.5 billion in revenue for the next quarter, lower than analyst expectations over $52 billion.

Other interesting statements from CEO Satya Nadella heard during today’s call include Nadella asserting that AI tech will continue to grow before remarking that “the age of AI is upon us.” This is reflected in stats like Microsoft’s Cloud revenue growing 22 percent year-over-year in the Q2 2023 report.

For more on how Microsoft has been doing gaming wise, be sure to read through our previous coverage including Xbox Game Pass hitting new subscriber highs for Microsoft (MSFT) in Q2 2023, and how Microsoft (MSFT) Q2 2023 Xbox hardware sales declined 13 percent from the previous year’s quarter.

Morgan Shaver

Senior Editor

Morgan is a writer from the frozen wastelands of Maine who enjoys metal music, kpop, horror, and indie games. They're also a Tetris fanatic who's fiercely competitive in games like Tetris 99... and all games in general. But mostly Tetris. You can follow Morgan on Twitter @Author_MShaver.