Xbox Revenue Jumped 49% During Holiday Quarter, Driven By Activision Blizzard Acquisition - Sales
by William D'Angelo , posted on 01 February 2024 / 4,532 Views
Microsoft has released its earnings report for the second quarter of the 2024 fiscal year, which ended up December 31, 2023.
Xbox gaming revenue increased by 49 percent year-on-year to $7.11 billion. This includes "44 points of net impact from the Activision acquisition."
Xbox content & services revenue increased 61 percent compared to the same quarter a year ago. This includes "55 points of net impact from the Activision acquisition." Xbox hardware revenue grew three percent.
The growth in Xbox due to the Activision Blizzard acquisition was enough for it to surpass Windows as Microsoft's third biggest division in terms of revenue generated.
Xbox set all-time records for monthly active users on Xbox consoles, PC, and mobile, and there were 200 million monthly active users. The figure includes Activision Blizzard.
"This quarter we set all-time records for monthly active users of Xbox, PC, as well as mobile where we now have 200 million monthly active users, inclusive of Activision Blizzard King," said Microsoft CEO Satya Nadella. "With our acquisition we have added hundreds of millions of gamers to our ecosystem, as we execute on our ambition to reach more gamers on more platforms.
"With cloud gaming, we continue to innovate to offer more players more ways to experience the games they love where and when and how they want. Hours streamed increased 44% year-over-year.
"Great content is key to our growth, and across out portfolio I've never been more excited about our line-up of upcoming games. Earlier this month we shared exciting new first-party titles coming this year to Xbox, PC and Game Pass, including Indiana Jones, and we've also announced that we're launching significant updates this calendar year to many of our most durable franchises, which bring in millions of players each month including Call of Duty, Elder Scrolls Online, and Starfield."
Overall, Microsoft reported for the quarter GAAP revenue was up 18 percent year-over-year to $62.02 billion and net income was up 33 percent to $21.87 billion.
Microsoft's forecast for the quarter ending March 31, 2024 expects total Xbox revenue to grow in the low 40s percent year-on-year, with 45 points of impact from Activision Blizzard. Xbox content & services is expected to grow in the low to mid 50s percent, with 50 points of impact from Activision Blizzard. Xbox hardware revenue is expected to decline.
"In gaming, we expect revenue growth in the low 40s, including approximately 45 points of net impact from the Activision acquisition," said Microsoft CFO Amy Hood on the quarter ending March 31, 2024.
"We expect Xbox content and services revenue growth in the low to mid 50s, driven by approximately 50 points of net impact from the Activision acquisition. Hardware revenue will decline year-over-year."
A life-long and avid gamer, William D'Angelo was first introduced to VGChartz in 2007. After years of supporting the site, he was brought on in 2010 as a junior analyst, working his way up to lead analyst in 2012 and taking over the hardware estimates in 2017. He has expanded his involvement in the gaming community by producing content on his own YouTube channel and Twitch channel. You can contact the author on Twitter @TrunksWD.
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The main interesting piece from this fiscal report was that gaming has now surpassed Windows as Microsoft’s 3rd largest revenue generator.
I am really curious what MS’s long term strategy is going to be going forward, and how console fits into that going forward.
long term strategy?? buy as many publishers as possible, putting everything on subscription(so no else can make money) and own the gaming industry.. that's obvious.
It is interesting? When you make a 75B purchase for that division what would be interesting is if it didn't.
Yes AB is a very 70 billion dollar company, OfCourse revenue jumped big time
It seems that units sold are down compared to the same period in 2022.
They also expect a 40% decline in January - March 2024, the same period in 2023 was already bad.
Who are they going to sell Game Pass subscriptions to is still a mystery when they also have exactly zero marketing campaigns going on. It's like they think advertising is shameful or something.
Presumably they will have taken an assessment as how effective such marketing campaigns would be. Some products/services can sell quite well without any.
Its also plastered all over the Xbox dashboard so its not like its hidden away.
Game Pass sure can't get out of the Xbox community bounds. I dunno how effective marketing would be for them but my best guess is that it would have an impact in the low single digits growth they have right now.
So they have probably maxed out their gamepass subs on Xbox. If sales are down, its basically pushing them against the wall because we know that they 'want' 80 million subs by 2027. So if they have maxxed out Xbox and PC isn't giving much, they are going to have to expand their horzons. I do not think that a gamepass sub for mobile games seems appeal at all And even if they put gamepass on PS5 and Switch, I doubt they can net 40+ million additional subs. So the way up is to go streaming and target all the TV manufactures. Even Sony.
I feel like Sony is already there and is looking to do something similar. They only difference is that Sony can still sell consoles and games at MSRP so they can profit from both
Where does the 40% number come from? I only seen that they expect hardware revenue down(unspecified amount)
I am starting to notice a trend here
trunkswd any changes in xbox sales?
Just think. In the short, short time frame of 20-30 years this Activision-Blizzard purchase will have paid for itself.
That's a bit concerning that they only had a 3% increase in console hardware sales for the second quarter of the 2024 fiscal year. And they even had their biggest holiday price cut in a long time.
Good luck Microsoft!
PlayStation had the same cuts, ( ps5 sell for 100 less then Xbox sx, so they was only at the same price)and had cod,in the box, we have to see what happens when Xbox got cod on the box
Well with console sales declining I believe it's wise to shift stronger into the PC gaming space and maybe even develop a Steam Deck competitor running windows as a surface xbox crossover device. At least until they pre start next gen early. I also wonder if battle.net will be shut down and integrated into the Xbox app and Steam or only into Microsofts store/xbox solution.
If they play their cards right, they might be able to achieve a better connection between Xbox and Steam accounts for save games, achievements and more, which could boost interest in Game Pass on PC a lot more.
Article updated with information provided during Microsoft's earnings call.
that's the first increase in hardware in a while, hopefully it stays that way.
Unlikely, they only nailed the 3% hardware increase cause of price cuts. I heard that Series X had a huge temporary $150 price cut at some ratailers.
wait they are still stelling hardware!
Hardware revenue increased 3%. If they did that despite price cuts (which reduces revenue per unit), then the total number of hardware units grew stronger than 3%.
thank you for the clarifcation
In 2022 the Series S was heavily discounted but the series X was not. Therefore it’s likely that 2023 sales are skewed much further towards Series X and that total units sales are actually lower.
With such a large price disparity between Series S and Series X just selling more Series X than Series S is enough to have a revenue increase while actually selling fewer units.
Hard to say. In 2022 most of their Sales came from Series S at $249, in 2023 half their Sales came from $349 series X.
Series X is more expensive, so It's more revenue. Anyway, they are almost flat, and that's not good.
So Microsoft spend $69 billion (69,000,000,000$) on the purchase of Activision Blizzard. When and how will they get that money back??? Never in a lifetime!!!
they already have, They now own $70B worth of assets in ABK. This form of wealth is probably generating way more revenue than $70B in cash on hand would anyway.
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