Activision continues to drive revenue growth for Xbox, while hardware sales experience a further decrease
Microsoft has released its financial results for the final quarter of the fiscal year, indicating an increase in overall gaming revenue despite declining Xbox console sales.
The growth in revenue is largely attributed to the acquisition of Activision Blizzard, with Call of Duty and other titles shifting from third-party to first-party revenue.
This growth helped Microsoft finish the year strongly, with total revenue across all divisions increasing by 15% compared to the previous year, reaching nearly $65 billion.
The numbers
For the quarter ending June 30, 2024
- Revenue: $64.7 billion (up 15% year-on-year)
- Operating income: $27.9 billion (up 15%)
- Net income: $22 billion (up 10%)
- Gaming revenue: Up 44%
- Xbox content and services revenue: Up 61%
- Xbox hardware revenue: Down 42%
The highlights
Revenue from Xbox content and services surged by 61% compared to the same quarter last year, making it the fastest-growing segment in Microsoft's More Personal Computing division. This growth is predicted to continue in the next quarter, thanks again to the Activision acquisition.
The surge in revenue for gaming significantly outpaced other divisions in More Personal Computing, the closest being a 19% rise in search and news advertising revenue.
Revenue for the More Personal Computing segment increased by 14% year-on-year, reaching $15.9 billion.
Despite the growth in other areas, revenue from Xbox hardware declined by 42% year-on-year. CFO Amy Hood informed investors that this decline is expected to continue into the next quarter.
Hood also mentioned that first-party game content performed better than expected, although this was offset by third-party content performance, noting that Activision games are now classified as first-party.
In the earnings call, CEO Satya Nadella mentioned that Xbox has 500 million monthly active users across all platforms and noted that the upcoming release lineup is stronger than ever post-June showcase.
During the last quarter, only one new game was released, Ninja Theory's Hellblade 2: Senua's Saga, but Nadella highlighted other achievements like the success of the Fallout TV series, which became the second most-watched series on Amazon Prime Video and increased Fallout game playtime on Game Pass by five times.
For the full fiscal year, Microsoft reported revenue of $245.1 billion, a 16% increase. Operating income rose by 24% to $109.4 billion, and net income increased by 22% to $88.1 billion.
