The year has not been kind to Xbox, with Microsoft’s latest earnings report revealing a 30 percent year-over-year decline in revenue from Xbox hardware for the quarter ending September 30. It’s worth noting that this decline does not take into account the $20-to-$70 price hike implemented on October 3, as this change occurred after the reported quarter. Similarly, the price increase for the Game Pass Ultimate subscription from $20 to $30 also took effect in October.

In contrast, revenue from Xbox content and services has remained relatively stable compared to the same period last year. According to Microsoft, growth in Xbox subscriptions and third-party content was partially offset by a decline in first-party gaming content.

The Xbox division was significantly impacted when Microsoft began reducing its global workforce earlier this year, resulting in the cancellation of games in development for the console. Notably, Microsoft scrapped the modern reimagining of Perfect Dark, a first-person shooter from 2000, and closed the Xbox studio responsible for its development. Additionally, the company cancelled Everwild, a long-in-development project by Xbox studio Rare, amidst its mass layoffs.

On a broader scale, Microsoft reported an overall revenue of $77.7 billion, which represents a 17 percent increase compared to the same period last year, and its operating income saw a 22 percent rise. In a post on X, Microsoft CEO Satya Nadella highlighted key points from the company’s earnings call, focusing primarily on its AI initiatives. He announced plans to increase AI capacity by 80 percent this year and double the company’s data center footprint over the next two years.