Microsoft has reported a 43% increase in its gaming revenue compared to the previous year, largely attributed to its acquisition of Activision.
Microsoft's financial statements for the first quarter of the fiscal year 2025 reveal robust growth in its gaming sector post-Activision acquisition, although revenue from Xbox hardware has decreased.
Financial Performance
During the quarter ending September 30, 2024:
- Total Revenue: $65.6 billion, a 16% increase from the previous year.
- Net Income: $24.7 billion, reflecting an 11% rise year-on-year.
- More Personal Computing (including Xbox) Revenue: $13.2 billion, marking a 17% increase.
Key Developments
Microsoft had a successful quarter overall, with Cloud and AI services being significant contributors. In its gaming divisions, notable growth was observed but exact figures in the More Personal Computing segment, which encompasses Xbox, were not disclosed. Gaming revenue surged 43% year-on-year.
The increase in Xbox content and services revenue, attributed to the "net impact from the Activision acquisition," was 61% compared to last year. However, Xbox hardware sales experienced a 29% decline year-over-year.
Despite the drop in hardware sales, CFO Amy Hood stated that gains in Microsoft's gaming sector outstripped projections, buoyed by strong demand for both first-party and third-party content as well as gaming consoles.
During the earnings call, CEO Satya Nadella noted that Game Pass achieved a "new Q1 record for total revenue and average revenue per subscriber." The recent release of Call of Duty Black Ops 6 is likely propelling these figures further, as Microsoft reportedly set new Game Pass subscription records following its launch, which occurred after the quarter ended and is not reflected in these results.
Nadella also emphasized, "One year after finalizing our acquisition of Activision Blizzard King, our focus is on crafting a sustainable growth strategy centered on higher-margin content and services. The shift is evident as we expand the avenues through which gamers engage with our offerings."
He added, "We achieved record monthly active users this quarter, with more gamers than ever accessing our games across multiple devices and the Xbox platform."
Looking forward, Microsoft anticipates a "high single digits" decline in gaming revenue for Q2 due to hardware-related issues, with Xbox content and services revenue expected to remain "relatively flat."
