Sales of Xbox hardware continue to shrink as the console’s latest iteration enters its fourth year on shelves. Hardware revenue for the Xbox division was down 31% in the most recent quarter due to lower sales. That follows a year-over-year drop of 30% in the same quarter in 2023.

Those two data points speak to a console that is struggling to substantially increase its player base during a period that should, historically, be its strongest sales period. But getting wider context on those numbers is a bit difficult because of how Microsoft reports its Xbox sales numbers (i.

Microsoft CEO Satya Nadella has taken note of a recent report that Xbox first-party titles are dominating PS Store best-selling games list. Nadella referenced the report in Microsoft’s latest earnings while discussing the company’s third quarter financial results.

This is the second quarter in a row that Microsoft is including its additional revenue from its Activision Blizzard acquisition that’s pushed gaming to be Microsoft’s third largest business, above Windows.