Less than 24 hours after Nintendo reported revenues for the last nine months of 2009, Microsoft announced its earnings for the October to December quarter of last year. Overall, the software giant saw record revenues of $19.02 billion, an increase of 14 percent. Net income--aka profit--was an impressive $6.66 billion for the quarter, a figure company officials credited to the rapid adoption of Windows 7 and brisk PC sales.

　　Despite being cheaper, holiday quarter Xbox 360 unit sales fell 13% to 5.2 million.

　　Unfortunately, Microsoft's overall success did not carry over to its Entertainment and Devices Division, which makes the Xbox 360 and Zune multimedia player. Year over year, the department's revenues fell 11 percent from $3.26 billion to $2.90 billion, with Xbox 360 and PC game revenue dropping by 12 percent, or $295 million. (Non-gaming revenue, including the Zune, fell 8 percent, or $59 million.) Part of the reason for the decline was the Xbox 360, which saw quarterly unit sales fall 13 percent to 5.2 million consoles despite price cuts to both its Elite (now $300) and Arcade (now $200) models.

　　Microsoft also repeatedly blamed the lower game earnings on unfavorable year-on-year comparisons "due primarily to the release of two significant games in the [holiday] quarter of the prior year." While never identified by name, the two titles were likely the first-party 360 exclusives Fable II and Gears of War 2, released in October and November of 2008. Major 360 exclusives for the 2009 holiday season included Forza Motorsport 3 and carryover sales of Halo 3: ODST, which launched in late September.

　　Microsoft also still claims its Xbox 360's software attach rate is an industry high of 8.8 games per Xbox 360. However, it conceded that "attach revenue declined [from Oct.-Dec.], given the challenging year-over-year comparison."

　　That said, Microsoft's report had some bright spots for the Xbox 360 platform. The company announced it decreased "cost of revenue" by 23 percent, or $478 million, mainly due to lower 360 production costs. That figure was somewhat offset by increased royalties to Xbox Live business partners, which were brought about in turn by a surge in popularity of the 360's online service. Some 23 million people have signed up for Xbox Live, an increase of 35 percent year over year, according to Microsoft. The company did not break out how many of the 23 million were paying Xbox Live Gold subscribers.

　　Speaking with analysts in a post-report conference call, Microsoft CFO Peter Klein said he expects Entertainment and Devices Division revenue "to trend with the rest of the game industry, and full [fiscal] year revenue should be roughly flat." Looking past the end of Microsoft's fiscal year on June 30, Klein said that the company is looking forward to the launch of Project Natal but offered no forecast of the motion-sensing system's financial impact.

　　You need a javascript enabled browser to watch videos.

　　Click To Unmute

　　Forza Motorsport 3 Video Review

　　Tears Of The Kingdom Is A Technological Marvel

　　Resident Evil 4 Is A Perfect RemakeHow Alan Wake II Made Me Face My Fear of Horror GamesGameSpot's Top 10 Games of 2023Thompson: The Pop Culture Icon’s Strange Legacy - LoadoutFirearms Expert’s FAVORITE Weapons Of 2023State Of Gaming Handhelds In 2023Like a Dragon: Infinite Wealth - Official Ichiban Kasuga Character Spotlight TrailerHow Lies of P Cracked the Souls GenreLike a Dragon: Infinite Wealth - Official Chitose Fujinomiya Character Spotlight TrailerLike a Dragon: Infinite Wealth - Official Eric Tomizawa Character Spotlight TrailerLike a Dragon: Infinite Wealth - Official Kazuma Kiryu Character Spotlight Trailer

　　Share

　　LinkEmbed

　　Size:640 × 360480 × 270

　　Start at: End at: Autoplay Loop

　　Want us to remember this setting for all your devices?

　　Sign up or Sign in now!

　　Please use a html5 video capable browser to watch videos.

　　This video has an invalid file format.

　　00:00:00

　　HTML5

　　Auto HD High Low

　　Report a problem

　　Sorry, but you can't access this content!

Please enter your date of birth to view this video

　　By clicking 'enter', you agree to GameSpot's

　　Terms of Use and Privacy Policy

　　enter