Microsoft shared monetary particulars for FY25 Q4 on Wednesday, revealing that gaming income is up 10% year-over-year for the quarter ending June 30, 2025.
More particularly, Xbox content material and companies income is up 13% year-over-year, with the corporate noting progress in first-party video games and Xbox Game Pass as drivers for the rise. Meanwhile, {hardware} income is down 22% year-over-year.
As an entire, Microsoft reached $76.4 billion in income for the quarter, with $27.2 billion in web earnings, up 18% and 24% year-over-year, respectively.
Xbox Game Pass is rising once more, whereas total sport gross sales are sturdy
This marks the third quarter in a row the place Microsoft reported progress in Xbox Game Pass, following related mentions in FY25 Q2 and FY25 Q3.
It additionally tracks with feedback from online game analyst Mat Piscatella, who famous that online game subscription spending reached an all-time excessive within the U.S. in June 2025.
Obviously, that features different non-mobile gaming subscriptions, but it surely’s nonetheless abundantly clear that Xbox Game Pass stays a major piece of the pie.
As for the “why,” it is price noting that Microsoft has launched a really staggering variety of first-party video games over the previous few months, with April seeing the arrival of Compulsion Games’ South of Midnight, in addition to Bethesda Game Studios’ The Elder Scrolls 4: Oblivion Remastered. Meanwhile, May introduced id Software’s DOOM: The Dark Ages.
Outside of first-party video games, it is also been an awesome interval for third-party additions to Xbox Game Pass, with Sandfall Interactive’s Clair Obscur: Expedition 33 seeing important acclaim upon its launch.
Game gross sales are additionally being bolstered by completely different ports of Xbox titles to PlayStation 5, with Forza Horizon 5 and Indiana Jones and the Great Circle coming to Sony’s gaming platform in April. Both have offered properly, with Forza Horizon 5 reportedly the best-selling sport on the console for 2025.
Speaking on the earnings name accompanying the monetary outcomes, Microsoft CEO Satya Nadella particularly praised the launch of Oblivion Remastered, additionally praising the arrival of Forza Horizon 5 on PlayStation 5.
Nadella additionally famous that Call of Duty: Black Ops 6 has handed 50 million gamers since launch, with Xbox Game Pass annual income reaching practically $5 billion for the primary time.
Layoffs muddy the waters of success
These outcomes make it much more infuriating then that Microsoft determined to once more lay off gifted employees throughout the Xbox gaming division, with cuts at groups like Turn 10 and King, whereas The Initiative was shuttered and Perfect Dark canceled. Rare’s long-gestating Everwild was additionally canceled.
ZeniMax Online Studios’ unannounced sport was additionally canceled, regardless of Microsoft Gaming CEO Phil Spencer reportedly being unable to cease taking part in it in a gathering. As a end result, morale throughout ZeniMax is “rancid” with employees sad and confused.
These layoffs reportedly occurred as part of broader cuts at Microsoft for the sake of continued funding in generative AI.