uploads///MSFT_Gaming revenue

Can Microsoft’s Xbox One X Boost Its Gaming Business?

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Dec. 4 2020, Updated 10:52 a.m. ET

Powerful Xbox One X features to drive gaming sales

Microsoft (MSFT) enjoys a dominant position in the console gaming business, driven by its Xbox gaming consoles and Xbox Live. The launch of Xbox One X in November 2017 may allow the company to remain in the same league with Sony’s (SNE) PS4 (PlayStation 4) and Nintendo Switch.

The newly released Xbox One X is powered by the 2.3 GHz, 8-core AMD Jaguar processor, 12GB of RAM, and a six-teraflop AMD Radeon GPU. The inclusion of a 4K Blu-ray player further increases its competitive edge over its rivals. So, the launch of the new console may help the company counter threats from other console makers as well as boost its gaming business.

From the chart above, we can see the revenue growth of Microsoft’s Gaming business in the last five quarters. In November, its sales are high due to the holiday season. During the period, the segment’s revenues grew at a CAGR of 19.8%. 

In fiscal 2Q18,[1. fiscal 2Q18 ended December 31, 2018] its total revenues on a constant currency basis increased 8.0% YoY (year-over-year), driven by the new Xbox One X sales in the holiday season. The Xbox Live subscriber base in fiscal 2Q18 grew 13.5% YoY to 59 million at a CAGR of 3.2%.

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Microsoft’s exclusive game series

According to Newzoo.com, the US gaming console market is expected to increase at a CAGR of 4.4% to $13.8 billion. This provides an opportunity for Microsoft with its new console and Xbox Live products.

Microsoft has added several exclusive titles such as State of Decay, Crackdown, and Sea of Thieves. They compete with Sony’s popular exclusive games such as the Uncharted series, The Last of Us, and God of War.

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