TL;DR: Xbox revenue fell about $1.7 billion (7%) in FY26 to an estimated $21.76B, driven by a 29% drop in hardware revenue and lower content and services. Xbox Series hardware earned an estimated $1.51B-its weakest year in over a decade-while impairments, severance, and higher costs hurt profits.
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Xbox earnings were down -7% year-over-year, representing a decrease of around $1.7 billion as the Xbox Series records its worst sales revenue of the generation.
Microsoft has reportedly its full-year revenues, showing sharp declines in Xbox earnings. Based on company data, Xbox made an estimated $21.76 billion in FY26, compared to $23.45 billion the previous year. Increased costs and a topline revenue reduction were the major culprits.
According to our estimates, FY26 wasn’t just the lowest annual earnings for the gen 9 Xbox Series console generation. FY26 represents the lowest year of Xbox console revenues in more than a decade. The last all-time yearly low for Xbox hardware sales was in FY20 with $1.66 billion earned, and in FY26, Microsoft made an estimated $1.51 billion from Xbox Series sales.
- Read more: Xbox earnings down -$380 million in latest quarterly decline
“XBOX revenue decreased $1.7 billion or 7% driven by declines in XBOX content and services and XBOX hardware. XBOX content and services revenue decreased 5% on a prior year comparable that benefited from strong first-party content performance, offset in part by growth in XBOX Game Pass. XBOX hardware revenue decreased 29% driven by lower volume of consoles sold,” Microsoft said in its 10K report.
Division profits were also impacted by things like impairment charges from cancelled projects and severance packages from the 1,600 layoffs that Xbox recently conducted from across its studios.
What were the main factors Microsoft attributed to the $1.7 billion year-over-year decrease in Xbox revenue?
How does FY26 Xbox hardware revenue compare to the previous decade’s low in FY20?
How did Xbox content and services revenue perform in FY26 and what offset factors does Microsoft mention?
What impairment charges and one-time costs affected Xbox division profits in FY26?
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Microsoft is currently working on its next-gen Project Helix console, which is believed to play both Xbox console and Windows PC games on the same device.
