Xbox revenue is once again down across the board, per Microsoft's latest financial report. Microsoft has now released its earnings report for its second quarter fiscal year - covering everything from October to December, 2026 - and the tech giant's gaming division isn't doing as hot as it was in the same time frame the previous year. Revenue from Xbox hardware sales, including Xbox Series X|S consoles and accessories, dropped a whopping 32% year-over-year. That's despite, and probably because of, two big price increases within the span of five months, making the still-expensive competition look relatively affordable. The company didn't give any specific sales numbers, though it hasn't been transparent about Xbox console sales for years. Even as Xbox drifts away from consoles and exclusives, former exec says the Xbox 360 set Microsoft up for success: "Look at them now, continuing to be the powerhouse – the global powerhouse" What to expect from Xbox in 2026 Game hardware is now $200 more expensive on average than it was in 2019, according to industry analyst Microsoft's entire 'This Is An Xbox' marketing campaign likely didn't help as the company implicitly told people that they didn't need an Xbox Series X|S console, really: "You're probably reading this right now from an Xbox." Xbox content and services revenue fell 5%, while Xbox's overall revenue fell 9%. Microsoft CFO Amy Hood said its gaming results were "below expectations, driven by first-party content" and the fall off could be attributed to a "strong first-party content performance" the year prior. (Thanks, XboxEra.) Reading between the lines, that might have something to do with Call of Duty: Black Ops 7's relatively weaker sales compared to 2024's Black Ops 6. Microsoft as a whole saw a 17% jump in revenue year-on-year. Perhaps Xbox's admittedly exciting slate can pick up the slack next year, between the Fable reboot, Forza Horizon 6, and Halo: Campaign Evolved all scheduled to launch in 2026. "We're going to try and be more consistent with what we do": The head of Xbox Game Studios on the Developer Direct reveals, multiplatform strategy, and hard lessons learned from 2025