XBOX hardware revenue fell 14% in Q1 FY2027, while content and services dropped 2% as Game Pass and third-party content revenue declined. Microsoft’s Q1 FY2027 report provides this year-over-year decline data. The first quarter of the fiscal year ending in 2027 ended on September 30, a month ago.
XBOX Content and Services Revenue Falls 2% in Q1 FY2027
Microsoft says declines in content and services revenue were driven by declines in third-party revenue and the Xbox Game Pass subscription model. However, it states that growth in first-party content revenue offsets these declines. XBOX has recently changed its approach to first-party offerings regarding console exclusivity.
The division has undergone many changes since Asha Sharma became CEO. Much of that reset has resulted in job losses and studio shake-ups. However, some decisions by the new top brass at Microsoft’s gaming wing have sparked excitement among players, and Microsoft CEO Satya Nadella has said in the past that he believes the XBOX division will return to growth by the end of this fiscal year.
As for the future of XBOX hardware, the next generation, codenamed Project Helix, is expected to be a family of devices. XBOX has been experimenting with handheld devices through a partnership with Asus. The ROG Ally X handhelds, while pricey, offer a top-tier experience in a handheld PC market that has gained focus since the Steam Deck’s launch.
Recent reports suggest the next XBOX handheld could launch next year, while the next console is expected in 2028. Learn more about that here.
Insider Gaming will continue to monitor all things XBOX and report any major updates. How do you feel about the year-over-year dip in XBOX revenue? Sound off about this story and all others in our official Discord server.
For more Insider Gaming coverage, check out the story about Asha Sharma’s appointment to a United States task force. Also, don’t forget to sign up for our weekly newsletter.
I'm Robert DeFelice. I spent years covering pro-wrestling industry for outlets such as Fightful. After years in wrestling journalism, I’ve transitioned to video games, another passion of mine.
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