The latest Xbox results are not looking great, and even with changes happening inside the company, things are still going down for now. In Microsoft’s third-quarter fiscal 2026 report (ending March 31), gaming revenue dropped by 7% compared to last year.
The biggest issue is still hardware. Xbox console revenue fell by 33% year-over-year, continuing a negative trend that has now lasted nine quarters in a row. This shows that fewer consoles are being sold overall, confirming that this part of the business is still struggling.
Content and services also declined by 5%. Microsoft explained this by saying last year had very strong results thanks to big first-party releases, so this year looks worse in comparison. Overall, the “More Personal Computing” division, which includes Xbox, was the only major Microsoft division to go down, falling by 1% to $13.2 billion.
It’s also worth noting that these results still belong to the previous Xbox CEO, Phil Spencer, since this is his last fiscal quarter, while Asha Sharma has now stepped in as the new CEO of Xbox. Sharma also spoke about these results on X (formerly Twitter) and said there is still a lot of “work to do”.
She stated, “Xbox earnings today. While we have made progress expanding the business and our margins, player and revenue growth has not yet met our ambition. We know we have work to do to earn every player today and into the future.” One of her first moves after becoming the CEO was to lower the price of Xbox Game Pass, even if that meant removing Call of Duty from day-one releases.
In related news, Asha Sharma stated she “wasn’t part” of the initial conversations regarding support for third-party storefronts, such as the Epic Games Store, on the upcoming next-gen Xbox console, and also confirmed that global RAM shortages will directly impact price and availability.
