Microsoft beat market predictions with its FY2018 Q2 earnings results yesterday, with cloud revenue growth (+56% YoY) being one of the main highlights. Because these latest financial results were also about the holiday shopping quarter, it's safe to say that Microsoft’s Surface and Xbox business were also under heavy scrutiny.
While Surface revenue ($1.3 billion) disappointed a little bit with a 1% growth compared to the same period a year ago, the Xbox division did much better and brought $3.9 billion in revenue (up 8% YoY), which the company attributed to the successful Xbox One X launch. Moreover, Xbox Live monthly active users grew 7% to 59 million, a new milestone for the company.
Here is what Microsoft CEO Satya Nadella had to say about gaming during the company’s earnings conference call yesterday:
Our new Xbox One X was the top selling premium console this holiday in the U.S., and we saw strong sales of the Xbox One S. We will continue to innovate in console to attract high value gamers who want immersive, 4K experiences, to build a broader subscription service with Game Pass, and to extend our services to all the devices in our customers’ lives across console, PC and mobile.
Our decision to release exclusive game content on Xbox Game Pass simultaneous with global release increases the value of the subscription for members and our partners, and we are off to a good start.
We grew gamer engagement again this quarter with 59 million monthly active Xbox Live members, record usage of our Xbox Live services, record viewers of our new streaming service, Mixer, and record Minecraft users.
Finally, we just acquired PlayFab, which serves more than 700 million gamers with more than 1200 games from companies like Disney, Rovio and Atari. It's a complete backend platform for mobile/PC/console game developers to build, launch, and scale cloud-connected games, extending our investments in Azure to provide a world-class cloud platform for the gaming industry.
In case you still had some doubts about it, Satya Nadella takes gaming and the Xbox division very seriously. It's good to know that Xbox Live engagement is up, but we'd love to know the number of Xbox Games Pass subscribers as well. Unfortunately, we don't think Microsoft will share some hard data until it can boast about a sufficient number of subscribers.
As for the freshly-released Xbox One X, Nadella only said that it was the top selling premium console in the US during the holiday season, which is definitely encouraging. The premium Xbox One X definitely remains for a niche audience, and Microsoft previously said that it expects to keep selling more Xbox One S consoles in the years to come.