On Wednesday, a report from The Information claimed that Microsoft’s purchase of Activision Blizzard hasn’t resulted in the growth that the company expected with its Xbox business at this point.
The report quotes (paywalled) one analyst—portfolio manager Danny Fish—as saying “Activision has been disappointing” for the company’s overall revenue. After reaching out to Activision and Microsoft for comment, representatives from both companies said The Information’s report was missing some information. The companies then provided context to show how the company has performed since the purchase along with the state of Microsoft gaming.
In its last four earnings reports, Microsoft has reported revenue increases regularly for Xbox content and services. Going back to Q2 FY2024, Xbox content and services revenue increased by 61% “driven by 55 points of the net impact from the Activision acquisition.” For the next quarter, revenue was reported to have increased by 62% with 61 points attributed to Activision. For Q4 2024, it was up another 61% with 58 points of net impact from the purchase. Lastly, Q1 of FY2025 saw the revenue increase by 61% with 53 points coming from Activision.
Breaking the numbers down, Activision has accounted for over 85% of each quarter’s revenue increase. It also shows, over the last three quarters, a slight steady growth outside of Activision’s impact from a low of one point to eight points as of Q1 FY2025.
What’s more, Microsoft CEO Satya Nadella alluded to the purchase’s benefit during the company’s Q1 FY2025 earnings call last October about the acquisition and gaming’s growth.
“We set new records for monthly active users in the quarter, as more players than ever play our games across devices and on the Xbox platform,” he said while saying that the business is “positioned for long-term growth”.
Regarding Xbox Game Pass, Nadella said that the service set a record for the number of new Game Pass subscriptions on Call of Duty: Black Ops 6’s launch day. He added that the service “set a new Q1 record for total revenue and average revenue per subscriber.”
Moving on to the suggestion from the report that, in 2021, Microsoft CEO Satya Nadella said that the company could “wind down its games business entirely”, the company flat out denies that. They point to comments made around that time with Nadella expressing that Microsoft is “all in on gaming”.
They closed by saying that engagement on Xbox platforms is “at an all-time high”. Microsoft says that they “are well over 500 million monthly players and over the last year, we’ve seen consistent growth in monthly users on cloud”.
Regarding the report’s claims on Azure servers and the Activision deal not being a catalyst to get other studios to release their games on Game Pass, GPlayr was told by sources close to the Game Pass business that The Information’s report “conflates an opinion that developers are scared of profit loss with the fact that the business is already set up to pay developers up front if that’s their choice for how they want to structure deal”.
Microsoft is scheduled to announce its Q2 earnings for FY2025 on January 29.
What do you think of Microsoft and Activision’s denial of various claims from the original report? Let us know down below, and join more discussions in the official GPlayr forums.
EDITOR’S NOTE: The article has been updated for clarification purposes.
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