Microsoft Gaming Revenue In Q4 Finishes Strong Due To Lockdowns, Looks Promising Leading Into Xbox Series X
Although the global pandemic is affecting every industry in different ways, Microsoft reports mostly growth according to its Earning Release for 2020.
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Although the global pandemic is affecting every industry in different ways, Microsoft reports mostly growth according to its Earning Release for 2020 fourth-quarter report. Overall revenue was up $13 by $38 billion, while Xbox content and services revenue increased a massive 65%.
The report states that the increase, which amounts to $1.3 billion in revenue, can primarily be attributed to record engagement, including strong third-party sales, and the ongoing stay-at-home guidelines that persist at the global level. Xbox hardware revenue increased by 49%, mostly due to an increase in console sales.
Although the news of overall revenue being up for video games is not surprising, since consumer spending across the board is up for the industry during the pandemic, it is peculiar to see that hardware sales are also up, given that the end of the year will bring entirely new options for consumers.
We are currently at the tail end of the lifespan for the current console generation, with the Xbox Series X and PlayStation 5 still on schedule to arrive this holiday season. It might then be fair to say that consumers who are buying into video game consoles this late in the console lifespan during the pandemic represent a market segment that might typically only have a passing interest in gaming, but given the sudden onset of available time due to stay-at-home orders, are newfound consumers.
The real question now is how Microsoft and other video game companies can work to retain these newfound buyers once life returns to normal.
On the other hand, strong hardware sales may also be attributed to the announcement of the Smart Delivery system. This is a new, consumer-friendly feature that allows an individual to purchase a game for the Xbox One, with an Xbox Series X copy automatically included. By reassuring a consumer base that they will not need to pay twice for what is essentially the same game on a different version of a console, Microsoft may be tapping into a new market segment.
In all likelihood, the success of Xbox related operations at Microsoft over the last five months is great news leading into the launch of the Xbox Series X. It will be fascinating to see what lies ahead, particularly when life does start to return to “normal” around the globe.
Source: Microsoft.com