Microsoft's gaming revenue fell 7% to $5.34 billion in the third quarter of fiscal 2026, as Xbox hardware revenue plunged 33% and content and services revenue declined 5% year over year. The drop came even as total company revenue rose 18% to $82.9 billion and Microsoft Cloud revenue grew 29% to $54.5 billion, highlighting a divergence between gaming and the rest of the business. CFO Amy Hood had guided for a mid-to-high single-digit decline in total gaming revenue, and the results landed at the softer end of that range. Microsoft is increasingly leaning on cloud-delivered gaming through Game Pass and new first-party titles to tie Xbox to its broader ecosystem, with a recent Game Pass Ultimate price adjustment yet to be reflected in results. Rivals Electronic Arts and Take-Two Interactive posted gains in their latest quarters, with EA net bookings up about 4% and Take-Two net revenues up 6%, though neither faces the hardware headwinds weighing on Xbox.
Electronic Arts IncEA posted net bookings up about 4%, contrasting with Microsoft's gaming decline.
Take-Two Interactive Software IncTake-Two net revenues up 6%, contrasting with Microsoft's gaming decline.
Microsoft CorporationGaming revenue fell 7% with hardware down 33% and content/services down 5%.