Microsoft’s Changing How it Reports Xbox Sales

Posted on September 18, 2019 by Brad Sams in Games, Xbox One with 6 Comments

One of the great traditions in the accounting offices at Microsoft is to change up reporting metrics to make it harder to compare year over year performance. While this isn’t exactly the case, as the company will argue it makes things easier to understand (sometimes), for FY 2020, the company is updating how it reports Xbox sales and revenue.

Out are specific metrics like Xbox Live active users and in will be revenue growth from the services the Xbox platform offers. Going forward Microsoft will report earnings for Xbox with “Xbox content and services revenue growth” as the primary health metric.

The company defines this metric as “Year-over-year percentage revenue growth for Xbox content and services”. These services include subscriptions, cloud services, advertising, video games, and third-party game royalties.

The big missing item from the list is console sales; Microsoft was not reporting those figures under the FY19 reporting model either.

What this signifies is that Microsoft is shifting the Xbox brand to focus more on software and service sales, rather than console sales. Considering that most console sales are at about a break-even or a potential loss, the basic idea here is to show where the actual positive cash flow comes from in the Xbox org.

Not that I agree with axing Xbox Live monthly active users from their reporting, but I understand the logic. That being said, this move does feel like it’s a shift away from transparency as Year-over-Year percentage growth is meaningless if you don’t know the baseline figures. The company does note that gaming revenue will continue to be disclosed in the company’s SEC filings.

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Comments (6)

6 responses to “Microsoft’s Changing How it Reports Xbox Sales”

  1. jwpear

    I guess this means things aren't going well and they want to hide it?

    In the end, don't we want to know the Xbox business revenue and YOY growth irrespective of consoles, games, or subscriptions? Does it matter where the money comes from as long as it contributes to growth and profitability?

    It would be nice to know how profitable the Xbox business is as a whole, but I think we have our answer there. If it were profitable, I'm sure they would be trumpeting that all the time.

  2. Vladimir Carli

    I wonder why they don't report them in a simple way... :-) It would come down to 4-5 numbers: consoles sold, subscribers to live/game pass, revenues... I understood it was an ethical duty for corporations to protect the interest of their shareholders (only when they want to)

  3. Bats

    ".....the basic idea here is to show where the actual positive cash flow comes from in the Xbox org." = All our strategies have failed like Xbox One X , Xbox One S, and the upcoming next gen Xbox. Therefore, we are just not going to make a big deal out of this anymore, because (quite simply) WE CAN'T.

    Microsoft didn't JUST LOSE the console war, but it clearly lost the "standards" war, as well. People's consoles are going to be Sony Playstations, not Xbox. This proves once again, how Thurrott was so wrong when he analyzed the console market and pretty much declared an Xbox glorious comeback. Remember, when the Xbox One S was announced, as well as the Xbox One X? What did Thurrott say? This is what WINNING looks like!

    I see this as the white flag waved by Microsoft in the gaming world. In a way, it's like World War II, where Microsoft is fighting the Germans (Sony) and decided "We can't win this war!" Therefore they are off to the Pacific to fight the Japanese (Google).

    Believe me, that war against Google (and Apple, and Amazon) is going to be really tough. That's because Google are masters when it's comes to streaming thanks to the technology behind YouTube. There is not another company or service that can come close to the compression technology that Google has. Microsoft does not have that. It's very uncertain how they can handle bandwidth, so we don't know hjow they will fare on this front of the gaming wars. We just don't know....and I believe Microsoft is very cool with that.

  4. Greg Green

    With Xbox on PC now there’s little reason for people who own and understand PCs to own the next Xbox. They can just play Xbox games on their better equipped PC.

  5. Tony Barrett

    So assuming MS will continue pushing subscriptions, and thus increasing revenue from said subscriptions, the future reporting of Xbox looks pretty good. You can generally assume though that when a company changes things so they don't have to report actual numbers anymore, things generally aren't so good. Apple did the same thing with iPhone, purely because iPhone sales have been falling for well over a year now. It's all so investors don't get cold feet and force a share firesale!

  6. sajalwd

    That's great news. play 1 player games with XBox