Microsoft is making a major change to the way it reports results for its Xbox business — ending its longstanding practice of reporting Xbox unit sales each quarter, and instead providing the number of active monthly Xbox Live users each quarter.
The change started with Microsoft’s quarterly earnings report on Thursday. Xbox officials say it creates “a more accurate view of engagement on our platform.” However, the decision to stop reporting Xbox unit sales also makes it tougher to directly compare the Xbox with Sony’s PlayStation franchise — which is so far leading this console generation in unit sales — and Nintendo’s Wii systems.
Some third-party sites and analysts provide sales estimates, but quarterly unit sales reported by the console makers have been the most authoritative measure.
At least for the moment, the number of active users reflects a more positive trend for Microsoft to cite. For the September quarter, the company said Xbox Live monthly active users rose to 39 million, up 28 percent from about 30 million in the same quarter a year ago, according to Microsoft’s financial results.
Here’s the statement from Microsoft’s Xbox team about the change.
We have been delivering a service-centric approach for the Xbox business for some time and now have Xbox services available across Windows 10 devices. Our measurement for success is focused on reach with highly active fans on Xbox as a key driver for monetization. As you’ve seen, we’ve become more focused on reporting on usage for some time in our public announcements. We’ve seen strong and steady growth in engagement year-over-year. Starting today with Q1 earnings this will be reflected with a key metric reported for Xbox being monthly active users on Xbox Live. We will continue to talk about other drivers of the business in earnings materials as usual. We adjusted how we measure and define Xbox Live users to narrow the definition to only look at users who have signed in to Xbox Live in the past month. We believe it will provide a more accurate view of engagement on our platform. Other companies measure engagement this way as well.
And here is the summary of the quarter from Microsoft’s 10Q filing.
Gaming revenue increased slightly, as growth in revenue from Xbox Live and video games was offset in part by lower Xbox hardware revenue. Xbox Live revenue increased 17%, driven by both higher volumes of transactions and revenue per transaction. Video games revenue grew 66%, driven by sales of Minecraft. We acquired Mojang AB, the Swedish video game developer of the Minecraft gaming franchise, in November 2014. Xbox hardware revenue decreased 17%, mainly due to lower volumes of Xbox 360 consoles sold.
The change in the reporting practice is consistent with what Phil Spencer, the head of Xbox, said during a recent interview at the GeekWire Summit, when asked for his take on Sony’s lead in overall unit sales.
“You’ll hear me talk a lot less about the competition,” Spencer told us at the time. “People will say, you’re losing so of course you’re not going to bring that up. Maybe we’ll test it someday. If I’m winning, I think I’ll stay in the same swim lane. It is really about the product that we have, the features that we add, and how we treat the customers of our box.”