Microsoft expects its gaming revenue to grow 45-49% in Q2 thanks to impact of Activision Blizzard deal

Microsoft has released its financial report for the first quarter of FY24 ended September 30. Here are the key takeaways related to Xbox, Game Pass, and other aspects of its gaming business.

• According to Microsoft’s Q1 earnings release, Xbox content and services revenue grew 13% year-over-year.
• Hardware sales (consoles) dropped by 7% compared to the same period last year.
• Overall, Microsoft’s gaming revenue reached $3.919 billion, up 9% year-over-year. As TweakTown’s Derek Strickland pointed out, these are record-breaking Q1 results.

Xbox gaming revenues, Q1’24:

Microsoft achieved a record-breaking $3.919 billion in Xbox gaming revenues in Q1’24, up +$309 million YoY (+9%).

First-party content & Xbox Game Pass were the main drivers, Xbox content & services up +13% YoY. pic.twitter.com/3ZuSyY2Y36

— Derek Strickland (@DeekeTweak) October 24, 2023

• During an earnings call, Microsoft CEO Satya Nadella said the company set a record for hours played per Game Pass subscriber in Q1 FY24.
• On launch day of Starfield, Xbox set a record for the most Game Pass subscriptions added on a single day ever.
• The game itself has already reached over 11 million players. Its pure sales remain undisclosed, but Nadella noted that PC accounted for nearly 50% of the hours played.
• According to Microsoft CFO Amy Hood, the first quarter saw “better-than-expected subscriber growth in Xbox Game Pass as well as first-party content, primarily due to the Starfield launch.”
• However, the company still doesn’t disclose the exact number of Game Pass subscribers. The last official figure was 25 million announced in January 2022.
• Hood also noted that with the Activision Blizzard deal finally closed, Microsoft expects its gaming revenue to grow in the “mid to high 40s” (45-49%) in the second quarter ending December 31, and Xbox content and services revenue to be up in the “mid to high 50s” (55-59%).
• Growth should be driven by the addition of Activision Blizzard titles to Microsoft’s accounting, as well as the upcoming release of Call of Duty: Modern Warfare III.
• In addition, Nadella said the company will now have 13 $1+ billion franchises, including Candy Crush, Diablo, Halo, Warcraft, Elder Scrolls, and Gears of War.
• “And we are looking forward to one of our strongest first party holiday lineups ever, including new titles like Call of Duty: Modern Warfare III and Forza Motorsport,” he concluded.