Microsoft notes Xbox Series X/S woes to last until June 2021

Microsoft-Reports-Revenues-Surge-Due-To-Xbox-Series-XS

Microsoft is expecting a continuation of their supply woes, as the company expects the Xbox Series X/S shortage will continue until at least June this year.

The Xbox Series X/S, together with other next-gen consoles, are unable to fill the demand. Microsoft suggests that there is far heavier demand than they expected. There are also other issues, including the current silicon shortage and scalpers.

Microsoft still expects growth from gaming business

During the company’s third earnings call, Microsoft CFO Amy Hood detailed the outlook for the entire company. For the upcoming fourth quarter for Microsoft, which ends in June 30, 2021, she notes they are looking towards strong growth.

“In gaming, we expect revenue growth in the mid to high single digits,” she said. “Significant demand for the Xbox Series X and S will continue to be constrained by supply.
“And on the strong prior year comparable, we expect Xbox content and services revenue to decline in the mid to high single digits.”

Hood notes that there will be heavy constraints in Microsoft’s gaming business. This goes in line with what Mike Spencer, Microsoft’s former head of investor relations, said in February.

Spencer detailed that the company will likely have supply issues until at least June. This, together with many other factors, will keep affecting the production of Xbox consoles.

Xbox still early in its life cycle

The Xbox Series X/S are having supply woes for a few more reasons than strong demand. AMD is still reeling from the current silicon shortage, especially their reliance on TSMC.

TSMC is facing potential woes from the current drought in Taiwan. There’s also a silicon shortage across several providers, with heavy demands from different sellers. Even the automotive industry is in dire need of chips at the moment.

Microsoft reported a surge for their gaming business during their earnings call. This includes content, software, and hardware for the company. Demand went up even further when their third-quarter revenue exploded with a 50% year over year.

For the third quarter, Microsoft’s gaming division made an absurd $3.53 billion. Their Xbox content and services revenue went up by 34 percent. The company claims that this is “driven by strength from third-party titles, Xbox Game Pass subscriptions, and first-party titles”.

Hardware revenue drove up to as much as 232%, with a consistent drive towards more console sales. With the next-gen Xbox early in its life cycle, further growth is expected. The Xbox Series X/S will continue to grow in sales as more gamers are looking to play newer titles.

Featured image courtesy of Xbox/Youtube Screenshot

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