In Microsoft's earnings release for the fourth quarter and full fiscal year ending June 30, the company's report on its gaming division shows the struggle that the business is currently going through.

On a good note, the revenue that Microsoft earned from Xbox Live for the recently concluded quarter increased by 4 percent compared with the same period last year, due to the higher number of transactions on the network and more money being spent by gamers on each transaction.

Xbox Live monthly active users shot up to 49 million for the quarter, which is an increase of 33 percent from the 37 million monthly active users reported in the fourth quarter of the fiscal year that ended June 30, 2015. In comparison, Sony reported 20.8 million PlayStation Plus subscribers across all its platforms, though the Xbox Live figures include the gamers signing in to the network through the free Silver account.

However, the slight bump up in Xbox Live revenue and the significant increase in Xbox Live users was not enough to offset the lagging sales of Microsoft's Xbox consoles, as according to the earnings report, revenue from hardware sales decreased by 33 percent. The revenue fall was attributed to the decline in the number of Xbox units sold and the lower average price of the consoles.

However, given the fact that Microsoft discontinued the Xbox 360 earlier this year, it seems Microsoft is pinning the blame on the Xbox One. The company is likely looking forward to receiving a boost in hardware sales with the pending release of the Xbox One S, the smaller and slimmer version of the Xbox One that will see its 2 TB version launched on Aug. 2 for $399.

The Xbox One S will also have 500 GB and 1 TB variants, which will be sold for $299 and $349, respectively, though no release date has been set for these two models.

Microsoft's overall revenue from its gaming division fell by 9 percent to $152 million, with the Xbox division included under the More Personal Computing sector, which also comprises Windows, smartphones and search advertising. The segment likewise struggled, with a decrease in revenue by 4 percent to $346 million, attributed to the lackluster performance of the gaming division and the Devices business, which is focused on smartphones and tablets.

Overall, Microsoft announced a profit of $3.1 billion for the quarter with a revenue of $20.6 billion, swinging from the $3.2 billion loss and $22.2 billion revenue in the comparable quarter in the previous fiscal year.

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