On Wednesday, Microsoft disclosed its financial report for Q4 of FY25, highlighting a 10% rise in gaming income compared to the same period last year, which concludes on June 30, 2025.
More precisely, the revenue from Xbox content and services has increased by 13% year-over-year, with Microsoft attributing this growth to an expansion in first-party games and Xbox Game Pass. Conversely, hardware income has decreased by 22% year-over-year.
In summary, Microsoft generated $76.4 billion in revenue for the quarter, marking a 18% and 24% increase in revenue and net income respectively compared to the same period last year, amounting to $27.2 billion in net income.
Xbox Game Pass is growing again, while overall game sales are strong
For three consecutive quarters, Microsoft has reported an increase in Xbox Game Pass subscribers, as seen in FY25 Q2 and FY25 Q3, and now in the current quarter.
This trend aligns with observations made by video game analyst Mat Piscatella, who pointed out that U.S. spending on video game subscriptions hit a record high in June 2025.
Despite other gaming subscriptions contributing to this total, it’s undeniable that Xbox Game Pass continues to be a substantial part of the market.
The surge in subscribers can be attributed to Microsoft releasing numerous first-party games over the last few months. April welcomed Compulsion Games’ South of Midnight and Bethesda Game Studios’ The Elder Scrolls 4: Oblivion Remastered, followed by id Software’s DOOM: The Dark Ages in May.
Additionally, the past period has been beneficial for third-party games added to Xbox Game Pass, with Sandfall Interactive’s Clair Obscur: Expedition 33 receiving positive reviews upon its release.
Furthermore, game sales are being boosted by ports of Xbox titles to PlayStation 5, such as Forza Horizon 5 and Indiana Jones and the Great Circle, which debuted on Sony’s gaming platform in April. Forza Horizon 5 has been the best-selling game on the console for 2025.
During a recent earnings call discussing our financial results, I, as Microsoft’s CEO, took the opportunity to highlight the successful debut of Oblivion Remastered and the exciting arrival of Forza Horizon 5 on the PlayStation 5.
Furthermore, I pointed out that Call of Duty: Black Ops Cold War has surpassed 50 million players since its launch, and for the first time ever, our Xbox Game Pass annual revenue neared $5 billion.
Layoffs muddy the waters of success
It’s even more frustrating now that Microsoft chose to let go of skilled employees from the Xbox gaming division, affecting teams like Turn 10 and King, while The Initiative was closed down and Perfect Dark was scrapped. Rare’s Everwild project, long in development, was also canceled.
An unannounced game by ZeniMax Online Studios was also terminated, despite Microsoft Gaming CEO Phil Spencer allegedly being captivated by it during a meeting. This has left morale at ZeniMax “putrid,” with employees feeling disheartened and bewildered.
These layoffs are said to be part of larger cost-cutting measures at Microsoft, aimed at maintaining investments in generative AI.
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2025-07-31 01:09