Microsoft reported $5.379 billion in Xbox revenue for FY2027 Q1, down 2% year over year. Hardware revenue fell 14%, while content and services fell 2% on a reported basis and 1% in constant currency. The quarter ended September 30, 2026; Microsoft announced the results on October 28.
Xbox revenue was $5.379 billion
Xbox revenue was $5.508 billion in the same quarter a year earlier. The $129 million difference corresponds to Microsoft's reported 2% decline.
Hardware and services had different drivers
| Measure | FY2027 Q1 result | Context |
| Xbox total revenue | $5.379 billion, down 2% year over year | $5.508 billion in FY2026 Q1, a $129 million decrease |
| Hardware revenue | Down 14% year over year | Microsoft attributed the decline to lower console sales volume |
| Content and services revenue | Down 2% year over year; down 1% in constant currency | Lower third-party content and Game Pass revenue, partly offset by first-party content growth |
The 14% figure is a revenue change. Microsoft attributed it to lower console sales volume. Its content-and-services measure covers first- and third-party content, Game Pass and other subscriptions, Xbox Cloud Gaming, advertising, and other cloud services. The category's decline therefore spans more than Game Pass.
What the Game Pass revenue decline says
Microsoft said lower Game Pass revenue contributed to the content-and-services decline. That is a revenue trend, not a subscriber count, and does not by itself say whether the number of subscribers changed. NeoTeo previously covered reported possibilities for customizable Game Pass plans, a separate question from the service's quarterly revenue.
Microsoft's FY2027 Q2 outlook
Amy Hood, Microsoft's chief financial officer, forecast mid-to-high-single-digit year-over-year growth in content and services for FY2027 Q2, driven by the timing of first- and third-party content launches. Microsoft also expected hardware revenue to decline year over year.
