Xbox One And Xbox 360 Ship 6.6 Million For Holidays, But Revenue Down 20 Percent

Xbox One Phil Spencer

Microsoft revealed Monday how well the Xbox One and Xbox 360 performed during the 2014 holiday shopping season, sort of. The console maker released its fiscal report for October through December of last year, but didn’t split out the sales of the two consoles so we can get an accurate read on their performance.

The Xbox One and Xbox 360 shipped a total of 6.6 million units, according to Microsoft’s fiscal report for the quarter ending December 31, 2014. At the same time last year, the Xbox One sold 3.9 million and the Xbox 360 sold 3.5 million. Presumably, these numbers have tipped further toward the Xbox One so it’s likely the newer console sold around 5 million or more.

The total number of console sales dropped from 7.4 million to 6.6 million year-over-year. The drop is almost entirely on the Xbox 360 side, as Microsoft noted.

The more concerning number is the 20 percent decline in revenue for Xbox sales. It shouldn’t be as surprising though. The $50 price drop during the holiday sales period combined with heavy bundle offers featuring Assassin’s Creed, Call of Duty: Advanced Warfare, and Sunset Overdrive drove down console revenue potential.

“Xbox Platform revenue decreased $703 million or 20%, driven by a 10% decline in total console volume, the transition from Xbox 360 to Xbox One with lower prices compared to the prior year, and lower revenue from second- and third-party video games and accessories,” Microsoft wrote in its investor statement.

Fable Legends (Xbox One)

Microsoft’s strategy was undoubtedly to grow the install base for the Xbox One and not give up more market share to the PlayStation 4, which has sold-through 18.5 million units. That goal appears to have been achieved as the company boasts “Successful price promotions drove Xbox One unit growth and share leadership in the U.S. this holiday.”

The Xbox One was the top selling console in North America for November and December. Europe continues to be a sore point for the Xbox One where the PS4 has sold in more countries.

While console revenue was down, revenue from sales of games and Xbox LIVE content rose. First-party game revenue was up 79 percent thanks to Minecraft, Halo: The Master Chief Collection, and Forza Horizon 2. Meanwhile, higher Xbox LIVE transactions drove that revenue stream up 42 percent.

Microsoft expects revenue from the Devices and Consumer division, which includes Xbox and Surface, to be $1.5 billion to $1.7 billion for the quarter ending March 31, 2015. This is less than the third quarter revenue of $1.82 billion last year.

The $50 Xbox One discount recently returned for the console with no indication of when the limited time promotion would end. Microsoft is willing to take lower revenue from console sales to increase market penetration and software sales. It may be a model that will work for the company even if it never outsells Sony’s PlayStation 4.

[Images via GotGame, Fable Legends]