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Microsoft reports 55 percent year-over-year jump in quarterly Xbox revenue, still down overall

Samit Sarkar (he/him) is Polygon’s deputy managing editor. He has more than 15 years of experience covering video games, movies, television, and technology.

Microsoft saw a 55 percent year-over-year increase in revenue associated with the Xbox 360 platform during the third quarter of its 2013 fiscal year, the company announced today.

Overall revenue for Microsoft's Entertainment and Devices Division — which encompasses everything Xbox 360-related, along with Windows Phone and Skype — rose 56 percent to $2.53 billion in the quarter that ended March 31, from $1.62 billion in the quarter that ended March 31, 2012. The division's operating income saw a turnaround from a $228 million loss a year ago to a gain of $342 million.

That increase was driven by higher Windows Phone and Xbox 360 platform revenue: Microsoft posted $641 million of growth in the Xbox business, a 55 percent year-over-year jump. That rise was primarily due to the recognition of $380 million of revenue the company had put off under something called the "Video Game Deferral," which accounts for "sales of video games with the right to receive specified software upgrades/enhancements."

Xbox 360 platform revenue is still trending downward for the full 2013 fiscal year: It's down $864 million in the nine months from July 2012 through March 2013, a 13 percent drop from the same period one year prior. The decrease resulted primarily from lower console sales — Microsoft shipped 8.9 million Xbox 360 consoles in the first nine months of fiscal 2013, whereas it shipped 11.1 million units in the same period of fiscal 2012 — but it was offset somewhat by higher Xbox Live revenue.

Microsoft continues to spend more on research and development, likely related to the next Xbox. Those expenses in the Entertainment and Devices Division increased $113 million (28 percent) in the third fiscal quarter, and $351 million (32 percent) in the first nine months of fiscal 2013. In both cases, the numbers are "primarily reflecting higher headcount-related expenses," according to Microsoft.

The company is expected to provide further details on its third-quarter investor call this afternoon.

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