One of the great traditions at Microsoft's accounting offices is to change reporting metrics to make it harder to compare results year by year. While this is not true, as the company will claim to make things easier to understand (sometimes), for FY 2020, the company updates how it reports sales and revenue from the Xbox.
Out are specific indicators such as Xbox Live active users and will be an increase in revenue from services offered by the Xbox platform. In the future, Microsoft will report Xbox revenue with "Increasing Xbox Content and Service Revenue" as a major health indicator.
The company defines this metric as "Increase in revenue percentage over the year for Xbox content and services". These services include subscriptions, cloud services, advertising, video games and third party royalties.
The big missing item from the list are console sales; Microsoft also does not account for these figures in the FY19 reporting model.
This means that Microsoft is moving the Xbox brand to focus more on software and service sales rather than console sales. Given that most console sales are worth the hassle or potential loss, the main idea here is to show where the real positive cash flow from the Xbox org comes from.
Not that I agree with the fact that Xbox Live is active monthly users by their reporting, but I understand the logic. Given this move, it seems to be a departure from transparency, as year-over-year growth is meaningless unless you know the basics. The company notes that gaming revenue will continue to be disclosed in the company's SEC filings.
Tagged with Microsoft, Xbox