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1Repair Windows errors before they cause bigger problems2Scan for outdated or missing drivers - takes under a minute3Clear out junk files and repair common Windows errorsXbox Gaming revenue fell 9% year over year in Microsoft’s fiscal second quarter, a $623 million decline, even as Microsoft’s total revenue grew 17%. The quarter ended December 31, 2025; Microsoft announced results on January 28, 2026. Hardware and content and services both declined, with hardware down more sharply.
How much did Xbox revenue decline?
Microsoft reported that revenue in its Gaming category decreased $623 million, or 9%, year over year. The company did not publish an absolute Xbox Gaming revenue total in the cited results, so the percentage and dollar decrease should not be treated as a separately reported total for Xbox revenue.
The earnings release reported More Personal Computing segment revenue of $14.3 billion, down 3%. Gaming is part of that segment, but the segment figure is not an Xbox-specific revenue figure. Microsoft’s FY26 Q2 earnings release provides the company’s reported figures.
Hardware and content and services both fell
| Category | Year-over-year change | What Microsoft reported |
|---|---|---|
| Xbox hardware | Down 32% | Microsoft attributed the decline to lower console volume. |
| Xbox content and services | Down 5%; down 6% in constant currency | The comparison was against a prior-year period that benefited from strong first-party content performance. |
| Gaming | Down $623 million, or 9% | The overall Gaming category declined; Microsoft did not state an absolute revenue total here. |
These are year-over-year comparisons for the quarter ended December 31, 2025. Constant-currency growth adjusts for exchange-rate movements; it is not the reported-currency result. Microsoft’s earnings release details the hardware and content and services figures.
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Content and services is broader than Game Pass
Microsoft’s content and services category includes first- and third-party games and in-game content, Xbox Game Pass and other subscriptions, Xbox Cloud Gaming, advertising, and other cloud services. The 5% decline is therefore not a standalone Game Pass revenue figure, and Microsoft did not provide absolute revenue totals for hardware or content and services in the cited passages.
What Microsoft said was behind the decline
On the earnings call, Microsoft management said Gaming revenue was down 9% (10% in constant currency) and content and services revenue was down 5% (6% in constant currency), below expectations. Management attributed the shortfall to first-party content performance, with an impact across the platform. That is the company’s explanation, not an independently established causal finding. Microsoft’s earnings call materials contain the contemporaneous commentary.
Rank #2
- What's in the box: Xbox Series S 512GB console, 1 Xbox Wireless Controller, High Speed HDMI cable.
- CPU: 8X Cores @ 3.6 GHz (3.4 GHz w/SMT) Custom Zen 2 CPU; GPU: 4 TFLOPS, 20 CUs @1.565 GHz Custom RDNA 2 GPU; SOC Die Size: 197.05 mm2.
- Memory: 10GB GDDR6 128 bit-wide bus; Memory Bandwidth: 8GB @ 224 GB/s, 2GB @ 56 GB/s.; Internal Storage: 512GB Custom NVME SSD
- Gaming Resolution: 1440p; Performance Target: Up to 120 FP.
- HDMI Features: Auto Low Latency Mode, HDMI Variable Refresh Rate, AMD FreeSync.
Microsoft’s wider results were stronger
Microsoft reported company-wide revenue of $81.3 billion, up 17% year over year (15% in constant currency). Microsoft Cloud revenue was $51.5 billion, up 26% (24% in constant currency); that is a separate business measure, not an Xbox result.
GAAP diluted earnings per share were $5.16, up 60%. Non-GAAP diluted earnings per share were $4.14, up 24% (21% in constant currency). Microsoft says its non-GAAP results exclude the impact of OpenAI investments. The release reported a $7.6 billion net gain from those investments, affecting GAAP net income and diluted EPS by $1.02. These accounting measures are distinct and should not be combined as if they were the same earnings figure.
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What Microsoft expected for the following quarter
At the time of the call, Microsoft management expected Xbox content and services revenue to decline in the mid-single digits in fiscal Q3 compared with a prior-year quarter that benefited from strong content performance, with Game Pass growth partly offsetting the decline. Management also expected hardware revenue to fall year over year. This was guidance given in January 2026, not a reported Q3 result or a current forecast.
Quick Recap
Rank #4
- What's in the box: Xbox Series S 512GB console, 1 Wireless Controller, High Speed HDMI cable.
- CPU: 8X Cores @ 3.6 GHz (3.4 GHz w/SMT) Custom Zen 2 CPU; GPU: 4 TFLOPS, 20 CUs @1.565 GHz Custom RDNA 2 GPU; SOC Die Size: 197.05 mm2.
- Memory: 10GB GDDR6 128 bit-wide bus; Memory Bandwidth: 8GB @ 224 GB/s, 2GB @ 56 GB/s.; Internal Storage: 512GB Custom NVME SSD
- Gaming Resolution: 1440p; Performance Target: Up to 120 FPS; HDMI Features: Auto Low Latency Mode, HDMI Variable Refresh Rate, AMD FreeSync.
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