Microsoft posts 29 percent year-over-year drop in quarterly Xbox 360 platform revenue

Microsoft's quarterly revenue for the Xbox 360 platform dropped 29 percent from 2011 to 2012, the company said in its second-quarter 2013 fiscal report today.

The Xbox 360 manufacturer reported results for the second quarter of its 2013 fiscal year, which runs from July 1, 2012, through June 30, 2013. The second quarter covers the three-month period from Oct. 1 through Dec. 31, 2012.

While Microsoft tallied a record-high $21.46 billion in revenue, a 2.7 percent increase from the same period in 2011, revenue for the company's Entertainment and Devices Division — which encompasses the Xbox business as well as Windows Phone and Skype — dropped by 11 percent from $4.24 billion to $3.78 billion.

Higher Windows Phone revenue from the Windows Phone 8 launch in October partly offset the poorer performance of the Xbox 360 platform, revenues of which fell $1.1 billion from 2011 to 2012, a 29 percent drop. According to Microsoft, the decrease in revenue resulted primarily from lower sales of Xbox 360 consoles — the company shipped 5.9 million units from October to December 2012, a 28 percent drop from the 8.2 million units shipped in the same quarter of 2011. The division also saw a jump of $98 million, 25 percent, in research and development costs during the quarter, most of which came from an increase in staff — perhaps related to development of the next Xbox.

Microsoft did report $380 million in deferred revenue for the division that came from a "Video Game Deferral," which the company defined as "sales of video games with the right to receive specified software upgrades/enhancements." If that revenue were added to the Entertainment and Devices Division's second-quarter earnings, the adjusted revenue would total $4.15 billion, bringing the 11 percent drop down to a 2 percent drop.

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