Xbox Content And Services Revenue Misses Nadella’s Performance Target Of 4.4%, Growing Only By 0.7%

The growth did meet expectations in some other sectors, such as Microsoft Teams growth.

Story Highlights

  • Microsoft has uploaded its new fiscal year 2023 report. It was found that the growth target for Xbox Content and Services Revenue set by Sadya Nadella was not met.
  • Xbox Content and Services Revenue had a growth target of 4.4%, but the revenue only grew by 0.7%. The CEO was hit with a compensation cut of $6 million as a result.
  • Microsoft has seen growth in various other sectors and met expectations with the performance targets.

According to a new report by Axios, Microsoft has recently uploaded its new 2023 filings for the fiscal year 2023. Microsoft’s CEO also included performance-based growth targets for the company’s various sectors. The report also included the only gaming-related financial incentive, the “Xbox Content and Services Revenue,” and it has fallen short of the expectations set by Satya Nadella.

The growth target for Xbox Content and Services Revenue this year was 4.4%, but it fell short massively and grew only by 0.7%. In other words, the growth only represents 10% of Microsoft CEO’s total performance targets. These performance targets were evaluated after considering the currency exchange rates. As a result of these missed Xbox performance targets, Satya Nadella has suffered a compensation cut of $6 million.

Core metric performance and payout percentages for FY20-FY22.
Core metric performance and payout percentages for FY20-FY22.

Many other sectors of the Xbox brand owner have enjoyed a larger increase in growth spurts in the fiscal year 2023. The performance targets of these sectors came closer to the threshold set by the CEO or surpassed. To clarify, Microsoft Team’s MAU growth amounted to 20%. The Microsoft Cloud’s subscribers also grew by 20%, while the revenue increase was 30%.

The CEO’s cash and stock compensation for this FY was listed at $48.5 million, which is lower than last year’s $54.9 million.

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Microsoft has also not seen enough growth in the Game Pass subscribers as initially expected by the CEO for the last two years. The subscription service growth surpassed Nadella’s pay target in 2020 but has been unable to cross it again since then. For instance, Sadya set the pay target for the Xbox service at nearly 73% growth in 2022. Unfortunately, all the growth it achieved at the end was only 28%.

Similarly, the set in 2021 threshold was 47.8% but grew only by 37.5% from the previous year. The Xbox Game Pass growth is no longer a viable metric used to determine Nadella’s compensation package. It is assumed that Game Pass has missed its pay target for the third year straight.

The last time Microsoft officially unveiled its Game Pass subscriber numbers was back in January of last year when the service reached over 25 million users. The amount of growth that may have happened since that time is still a mystery, but it appears not to match all the expectations of the Xbox brand. The subscription service may have hit 30 million users by now. 

Nevertheless, these pay targets set by the Microsoft CEO are not actual business plans. Not reaching these goals does not necessarily hurt the Xbox brand since the company may be focused on something else at the moment.

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Shameer Sarfaraz is a Senior News Writer on eXputer who loves to keep up with the gaming and entertainment industries devoutly. He has a Bachelor's Degree in Computer Science and several years of experience reporting on games. Besides his passion for breaking news stories, Shahmeer loves spending his leisure time farming away in Stardew Valley. VGC, IGN, GameSpot, Game Rant, TheGamer, GamingBolt, The Verge, NME, Metro, Dot Esports, GameByte, Kotaku Australia, PC Gamer, and more have cited his articles.

Experience: 4+ Years || Education: Bachelor in Computer Science.

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