Microsoft Report: Record Game Pass Revenue, Decline in Xbox Sales, and Strong Impact of Activision Blizzard
Microsoft released the report for the first quarter of fiscal year 2025, which ended on September 30. We've highlighted the key indicators from the gaming division.
- Revenue from Microsoft's entire gaming business grew by 43% year-on-year, reaching $5.62 billion, with Activision Blizzard responsible for all 43% of this growth.
- The results exceeded the company's expectations — thanks in part to strong performance from both its internal studio games and third-party projects.
- Sales of Xbox gaming content and services surpassed $5 billion (+61% year-on-year). Excluding Activision Blizzard, the division's revenue would have increased by only 8%.
- Specifically regarding Activision Blizzard, the division earned $1.69 billion in the first quarter with operational losses of $440 million. These losses are associated with the ongoing integration of the company into Microsoft's structure.
- Quarterly revenue from gaming hardware dropped by 29% to around $525 million, linked to declining sales of Xbox consoles.
- In a conversation with investors, Microsoft CEO Satya Nadella noted that the company set a record for MAU (Monthly Active Users) in the first quarter.
- The Game Pass service also set a record for total revenue and average revenue per subscriber, though specific figures were not disclosed by the company.
- Despite the record launch of Call of Duty: Black Ops 6, Microsoft predicts a slight dip in gaming division income for the second quarter due to declining console sales. The company also does not expect revenue growth in the gaming content and services segment.
- This is largely because Game Pass revenues are recognized over a long period rather than instantly within the quarter. The same applies to sales of Black Ops 6 — as the game requires an internet connection, the majority of its revenue comes in the form of deferred payments.
