Tech giant Microsoft has reported declines in its video games division's financial performance for the second quarter of this year, something that it attributed to first-party performance and a massive dip in console sales. In its 10-Q filing with the SEC, the company blamed this year-on-year decline on 2024 boasting a stronger "first-party content performance". Speaking to investors, chief financial officer Amy Hood said that this was "below expectations" and "driven by first-party content". Xbox hardware also disappointed, with revenue declining 32% year-on-year on the back of weaker console sales. Looking towards Q3 – the three months ending March 31st, 2026 – Microsoft is forecasting yet another year-on-year decline in Xbox content and services revenue, as well as its hardware business.