Microsoft reported that Xbox content and services revenue fell 2% year over year in FY27 Q1, while hardware revenue fell 14%. The quarter ran from July 1 through September 30, 2026. Both percentages measure revenue, not the number of consoles sold.
Xbox’s two revenue declines
| Metric | Year-over-year change | What it measures |
| Content and services revenue | Down 2% | Revenue across the combined content-and-services category |
| Hardware revenue | Down 14% | Revenue from Xbox hardware |
Microsoft’s results attribute the content-and-services decline to lower revenue from third-party content and Xbox Game Pass, partly offset by growth in first-party content. The 2% is for the combined category, not a Game Pass-only result.
For context on the subscription side, NeoTeo previously covered a report about possible customizable Game Pass plans. That earlier report concerns a proposed plan redesign, while these figures describe quarterly revenue.
What Asha Sharma said about console supply and games
Xbox CEO Asha Sharma said demand for consoles exceeded available supply and that Xbox was expanding its refurbishment program to get more consoles to players. Her statement also reported records for Minecraft, described a Call of Duty release as the franchise’s most acclaimed in more than a decade, and said Xbox PC platform revenue grew by double digits.
