Microsoft said on Wednesday, July 22, 2020, that its gaming business recorded a sharp increase during the second quarter of fiscal 2020, the company’s first reporting period to reflect the coronavirus pandemic in Western markets. The firm reported a 64% rise in gaming revenue for April through June compared with the same quarter in 2019, an increase of $1.3 billion.
Most of that growth came from Xbox content and services: sales of games and related services such as Xbox Live, Xbox Game Pass and Game Pass Ultimate rose by $1.2 billion, a 65% increase. Microsoft attributed the gain to “record engagement, including strength in third‑party titles while stay‑at‑home guidance continues.”
Console sales and hardware revenue climbed
Hardware revenue for Xbox also jumped substantially, with console‑related revenue up 49% in the quarter. Microsoft noted that console shortages were present in several regions as the company prepared to discontinue the Xbox One S All‑Digital and Xbox One X models ahead of the Series X launch later in 2020.
Pandemic demand mirrored across entertainment and rivals
Microsoft’s gaming surge mirrors trends seen in other home‑entertainment services during the pandemic. The company said its six‑month subscriber growth for some services roughly matched the total additions recorded in 2019. Sony, a major competitor in consoles, increased PS5 production in response to strong demand for videogames during the same period.
Other Microsoft businesses also grew
Microsoft reported broadly strong fiscal results beyond Xbox, as remote work and distance learning boosted demand for technology. Surface revenue rose $374 million, or 28%, year‑over‑year for the quarter as individuals and organizations upgraded devices to support telework.
Windows revenue increased by $337 million, a 6% gain driven by higher PC sales during the pandemic. Microsoft said preinstalled, non‑Pro Windows revenue on new devices grew 34% as consumers purchased machines for work and study at home, while Windows Pro revenue declined 4%, reflecting weaker demand from small and medium businesses.
Cloud and Office performance
Microsoft’s server products and cloud services division expanded 19%, led by Azure, which posted a 47% increase in revenue. Office also posted solid gains: the company reported 42.7 million Microsoft 365 consumer subscribers, a 23% year‑over‑year rise, and Office 365 commercial revenue grew 19%.
