Microsoft Points Finger at First-Party Games as Xbox Gaming Revenue Slips

Microsoft's games division is getting more attention after the company's most recent earnings report showed that the Xbox business is still going down. It was already known that hardware sales were going down and the console market was having a hard time, but new comments from executives shed more light on where Microsoft thinks the real problem is.

When asked about the idea that Game Pass is hurting the company's gaming income, Microsoft CFO Amy Hood said things that Windows Central picked up on. Hood said on the company's earnings show that Microsoft actually thinks Game Pass sales will go up in Q3, not down.

She did say, though, that sales of Xbox systems are expected to drop again in the next quarter.

It is said that Microsoft hopes that more people signing up for Game Pass will help make up for that loss, but the Xbox brand's general future remains uncertain. Even though there is hope for Game Pass, the Xbox console as a whole is still having trouble. Another drop in sales is expected for the once-dominant console brand, which makes people worry about Microsoft's long-term gaming plan.

First-party games are being put to blame.

Microsoft's own games, according to Amy Hood, are to blame for the recent decline in revenue generated by the gaming industry. She pointed out that Gaming revenue was below expectations driven by first-party content with an impact across the platform. In this illustration, the second quarter of 2025, which runs from October 1 to December 31, is depicted.

There were four major video games that were released by Microsoft during that time period: Ninja Gaiden 4, Keeper, The Outer Worlds 2, and Call of Duty: Black Ops 7. In terms of sales, Black Ops 7 emerges as the most significant of these, but it also has the potential to be the most disappointing.

It's going to be tough for Microsoft to move forward with a bad year.

It's possible that Microsoft will be able to stomach one terrible year for Call of Duty, but if the series continues to have issues, things might go very ugly. Due to the fact that the game industry is becoming increasingly dependent on major first-party releases, the ongoing failure of Call of Duty might be extremely detrimental.