Xbox Live usage and revenues grow alongside Fortnite

Microsoft today confirmed that its gaming business continues to grow, and active Xbox Live members reflect that. Monthly active users on Xbox Live hit 57 million in the first quarter of Microsoft’s fiscal 2019. That’s up 8 percent year-over-year. That’s also down only 2 million from the holiday period of 59 million monthly active users. Microsoft notes it is seeing Xbox Live growth across consoles, Windows 10, and mobile.

The Xbox gaming division saw a 44-percent year-over-year jump in revenue. And while the Xbox One X hardware, which didn’t launch until Q2 of fiscal 2018, is responsible for most of that, games and Xbox Live subscription programs were also major contributors.

“Xbox software and services grew 36 percent primarily driven by third-party title strength,” read Microsoft’s quarterly report.

Microsoft saw exactly the same percentage growth in services and software during last quarter. And once again, the company is pointing to its partners for delivering a lot of that success. The biggest third-party game at the moment is likely Fortnite. That free-to-play battle royale is among the most-played games in the world right now. It also does all of its business through digital transactions, which means players are using credit cards and similar methods to buy products through Xbox Live. Microsoft takes a 30-percent cut of that action.

Xbox services

On top of Fortnite, Microsoft also has its own services. It has never said exactly how many people subscribe to either service, but they likely make up a significant portion of the “services” category. Xbox Live Gold is the company’s $60 online-multiplayer membership program, and Microsoft has relied on it since the launch of Xbox 360 in 2005 to provide steady revenue.

But as the company has shifted toward services across its businesses, it has also launched Games With Gold. That is a $10-per-month game-subscription program. Microsoft positions it as the “Netflix of games.” And it encourages its biggest fans to all subscribe by releasing all of its first-party games at the same time that they hit retail for $60.

Games With Gold should see significant growth in Q2 of fiscal 2019. Microsoft released Forza Horizon 4 to glowing reviews, and I even wrote that it turned Games Pass into a must-have service.