That decline was once again due to waning Xbox hardware and Xbox content and services revenue. Digging deeper, the U.S. tech giant said Xbox hardware revenue decreased by 32 percent year-on-year "driven by lower volume of consoles sold." Xbox content and services revenue decreased by 5 percent, although Microsoft suggested the bumper performance of first-party content during the prior year was partly responsible for that dip. Even so, Microsoft expects Xbox content and services revenue to decline once again in Q3, but predicted that continued downturn will be "partially offset by growth in Xbox Game Pass." It also, however, follows price hikes for Xbox Game Pass and console hardware in 2025 and widespread layoffs within Xbox Game Studios.