Update 29/04/2026: Following the publication of the earnings and this article, Xbox CEO Asha Sharma commented on the revenue decline, saying the division knows "we have work to do to earn every player today and into the future."
"Xbox earnings today. While we have made progress expanding the business and our margins, player and revenue growth has not yet met our ambition. We know we have work to do to earn every player today and into the future."
Original Story:
Microsoft reported its fiscal year 2026 third-quarter earnings today, and when it comes to Xbox revenue, while new chief executive officer Asha Sharma has been making a lot of noise and a bit of change about a brighter future for Xbox, her tenure hasn't started to impact Xbox's numbers yet, as hardware revenue declined again by over 30%, and Xbox revenue overall saw a 5% decline.
"Xbox content and services revenue declined 5% (7% CC) on a prior year comparable that benefited from strong first-party content performance," the report reads. That's three quarters of decline in a row for the Xbox division, after the first quarter saw a decline in the October 2025 report, and the second quarter report in January 2026 reported a decline.
It's also two quarters back to back where Xbox hardware revenue fell by more than 30%. It would've been three straight quarters, but the first quarter decline for Xbox hardware only took a 29% dip.
Meanwhile, revenue for Microsoft as a whole was up 18%, bringing in $82.9 billion. That came mostly from its emphasis on AI and its Cloud services, which really only shows just how small of an item Xbox is on the company's balance sheet, when the biggest acquisition in the history of the industry made by Microsoft just a few short years ago is trounced by the earnings the company reports in a single quarter.
The continued decline in hardware revenue is also another sign of how much of a hill Sharma and her team will have to climb when it comes to getting players back on Xbox consoles. With memory issues already confirmed to have an impact on the price of Project Helix, it will have to be one heck of a device to convince players who've already become even more ingrained in their PC, PlayStation, and Nintendo ecosystems in the last six years to now spend a large chunk of change to make yet another jump to Xbox.
But since Sharma has been garnering a lot of goodwill for her new era of Xbox, it'll be interesting to see if the fourth quarter for Microsoft's 2026 fiscal year shows a bump in hardware revenue, with players already looking to buy in for whatever the next era of Xbox will bring. It doesn't seem likely, but it would be a direct sign of Sharma's words already starting to positively resonate with fans of the brand.
About the author: David has been writing about videogames, technology, and culture since 2020, with a focus on reporting daily news across multiple publications, including GameDaily.Biz, GameSkinny, and PlayStation Universe before joining Wccftech in 2025. David started contributing as Canada/US reporter for Wccftech's gaming section in 2025. Besides being up-to-date on the industry's movements, he loves interviewing developers, reviewing games, and writing intricate essays about the symbolism and layered meanings to be found in rich narratives as he's done for publications like GamesIndustry.Biz, LostInCult, and others. Outside of games he loves movies, music, theatre, his hometown, and his family, though not necessarily in that order.
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