Xbox hardware sales fuel Microsoft’s 16% gaming growth

Hardware remained a driving force for Microsoft’s gaming division. The company reported 2022’s first-quarter earnings today, revealing a revenue increase of 16% over the same period from the previous year. Xbox content and services like Game Pass grew 2% year-over-year, and that contributed to the overall growth for the gaming segment. Hardware sales, however, drove the majority of the increase.

“Xbox hardware revenue grew 166% driven by continued demand for Xbox Series X/S on a low prior year comparable,” reads the Microsoft earnings report. “Xbox content and services revenue grew 2% … with growth in Xbox Game Pass subscriptions and first-party titles partially offset by declines from third-party titles.”

The Xbox Series X/S consoles launched in November 2020 and were impacted by industry wide shortages from manufacturing and shipping issues created by the ongoing Covid-19 pandemic. The lack of available hardware combined with consumers remaining indoors means that consoles continue to sell as fast as they hit the shelves. Microsoft’s Executive Vice-President of Gaming Phil Spencer told The Wrap he expected shortages to continue into 2022.

First party games like Hellblade: Senua’s Sacrifice, Microsoft Flight Simulator, and The Elder Scrolls Online have kept engagement high for Game Pass. And that engagement will likely gain momentum with Halo Infinite and Forza Horizon 5 scheduled for release later this year. While there are no updated numbers for Game Pass subscriptions, analyst estimates put the number somewhere around twenty million.

As supply bottlenecks ease and with flagship titles coming soon, Microsoft may be looking at as solid a second-quarter as it reported a first-quarter.