Gaming revenue declined 7% despite more than 200 million new players, as Microsoft cut jobs, changed pricing and set goals to restore player and revenue growth by fiscal 2027 and improve margins through FY2030.
Microsoft said Xbox gaming revenue fell 7% in fiscal 2026, which ended in June, even as the division added more than 200 million new players. In the fiscal fourth quarter, overall Xbox revenue fell 10%, with content and services revenue down 10% and hardware revenue down 13%, underscoring pressure on both consoles and software. New Xbox CEO Asha Sharma, who replaced Phil Spencer in February, has outlined a turnaround focused on aligning player and revenue growth by the end of fiscal 2027, reaching peer-level margins by next year and aiming for industry-leading margins by FY2030. The plan includes layoffs, studio divestitures, console price increases of as much as $150 from August 1, a cut to Game Pass Ultimate pricing in April, deeper investment in franchises including Minecraft and broader global partnerships, including in China.