Losses at Microsoft's Home and Entertainment division has almost doubled in the most recent quarter compared with a year earlier as revenue tumbled and marketing spending increased.
The division, which includes the Xbox game console, PC games, consumer hardware and Microsoft TV, posted an operating loss of $190m (£118m) for its third quarter ending 31 March, compared with a $97m loss a year earlier.
Quarterly revenue at the division fell to $493m (£306m) from $943m a year ago. The drop is largely attributable to lower sales of Xbox game machines and games in all regions. Last year's quarter marked the launch of Xbox in Europe and Japan and sales following the US launch.
One setback for Microsoft occured earlier this month, when leading games maker Electronic Arts announced 10 online sports games it would roll out for Sony's PlayStation 2.
The downward trend continues from Microsoft's second quarter, when losses at the Home and Entertainment division also nearly doubled.
The filing with the US Securities and Exchange Commission (SEC) came just as Microsoft announced new games and features for its Xbox and the Xbox Live online service on the eve of the Electronic Entertainment Expo this week in Los Angeles.
Microsoft's cash cows remain its client and information worker groups, which include its Windows operating system and Office productivity suite respectively.
Operating income at the client segment was up to $1.99bn (£1.2bn) in Microsoft's third quarter from $1.88bn the previous year. The information worker unit earned $1.94bn, up from $1.61bn a year ago.
The server platform segment at Microsoft increased its operating profit to $421m (£261m) from $343m as a result of increased server shipments.