In a fiscal year littered with firsts, Microsoft’s gaming division hit a new high water mark.
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The division, which includes Xbox hardware, Xbox and software and services, revenue from games made by Microsoft as well as other studios, generated more than $10 billion in annual revenue for the first time. In the fourth quarter, revenue grew by a whopping 39 percent over the previous year to reach $2.29 billion.
“In gaming, we are pursuing our expansive opportunity — from the way games are created and distributed to how they are played and viewed, surpassing $10 billion in revenue this year for the first time,” Microsoft CEO Satya Nadella said on a call with investors Thursday. “We are investing aggressively in content, community and cloud services across every endpoint to expand usage and deepen engagement with gamers. The combination of Xbox Live, Game Pass subscriptions and Mixer are driving record levels of growth and engagement.”
Gaming has been an up-and-down area for the company over the years, despite massive investments from Microsoft. It wasn’t too long ago that calls for Microsoft to sell off its Xbox business came from both investors and former executives alike. But Xbox is part of larger gaming ambitions at Microsoft that also include its PC hardware business, Windows 10 and other important parts of the company.
Microsoft is in a battle with Nintendo and Sony in the competitive gaming market. Microsoft’s banner year compares to a similarly strong performance, while Sony’s industry-leading gaming division put up big numbers once again.
Nintendo, whose North American headquarters is just down the road from Microsoft’s Redmond, Wash., struck gold with the Nintendo Switch this year. The smash-hit console powered Nintendo to $9.7 billion in net sales for its fiscal year ending in March, up 105 percent from the year before.
Sony, with the PlayStation 4, is the clear leader among console makers and its financials reflect that. For the year ending in March, the company’s Game and Network Services division generated $17.7 billion in sales and $1.6 billion in profit for the year, more than any other part of the company.
Xbox Live subscriptions actually declined this quarter, from 59 million in Q3 to 57 million, but that figure is still up 8 percent over a year ago.
Microsoft’s streaming service Mixer reached 20 million monthly active users last month, up from 10 million six months ago. Mixer, which rolled out new updates last month on its one-year anniversary, competes with Twitch, the Amazon-owned streaming service that has more than 100 million users.
Microsoft is coming off the release of its newest and most powerful console, the Xbox One X, last year. In June, an eventful E3 conference saw Microsoft announce the acquisition four game studios and creation of a new one. The company also revealed that it is working on the next generation Xbox console, and a new entry into the vaunted Halo franchise is on the way.