Xbox continues to make it so you do not need to buy an Xbox console to play Xbox games, and so, a lot fewer people are buying Xboxes.

Xbox is continuing to grow its services, including Game Pass and Cloud Gaming, while hardware sales took a big dip.

The 42 percent drop for quarterly hardware revenue—by far the largest such drop since the introduction of the Xbox Series X/S in 2020—follows an 11 percent year-over-year decline in the second calendar quarter of 2023.