Xbox hardware revenue decreased 14% year-over-year during Microsoft's (MSFT) Q1 FY27

Xbox content and services revenue is also down this quarter.

Microsoft (MSFT) issued its FY27 Q1 quarterly earnings report. While the company has surpassed its revenue and earnings-per-share expectations, not all of the news is good, specifically when it comes to Xbox. As part of this latest earnings report, Microsoft revealed that Xbox's hardware revenue has decreased 14 percent year-over-year, while content and services revenue is down by two percent.

The Microsoft FY27 Q1 earnings report points to the decline in Xbox revenue. The slide in Xbox content and services revenue, specifically, has been attributed to an overall decline in Xbox Game Pass revenue and third-party content. Microsoft does note that the lower figure is partially offset by growing first-party content.

Like many other tech companies, Xbox has struggled to navigate the ongoing hardware crisis. In August 2026, Xbox increased the price of its consoles for the second time in under a year. The 1TB Xbox Series X model's price was increased by $150 USD while the 2TB model was discontinued entirely.

There is much more to learn from Microsoft today, as CEO Satya Nadella is expected to jump on today's investor call. You can listen to the Microsoft (MSFT) Q1 2027 earnings call at 2:30 p.m. PT/5:30 p.m. ET on the Shacknews Twitch and X (formerly Twitter) accounts.

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