Xbox revenue soars but it’s bad news for Microsoft

Xbox revenue soars but it’s bad news for Microsoft
Images via Microsoft

Written by 

Tom Chapman

Published 

31st Jan 2024 10:54

The big three of Microsoft, Nintendo, and Sony are a Triforce of gaming, even as Tencent snaps at their heels and SEGA continues to threaten a comeback. This has led to a pretty fierce console war between the Blue and Green teams, all while Nintendo happily plays with its first-party IPs in the corner.

Sony was dealt a major blow in 2023, with the long-gestated Activision Blizzard King deal finally going through. Although Microsoft splashed a jaw-dropping $68.7 billion on the deal, some think it slit Sony's throat and left it to bleed out. The latest figures don't quite paint the same picture.

Xbox revenue soars in Q2

As reported by VGC, Microsoft's quarterly revenue stats are in - making for some interesting reading. The ABK deal has shaken things up over at Xbox, with sales soaring in Q2. Gaming revenue was up 49%, with a 61% boost to Xbox content and services revenue like Game Pass.

There was a smaller 3% increase in hardware revenue, although we know Microsoft has always been braced not to make much money off consoles. This is suspected to be linked to the mass layoffs in the physical games division, hinting that Microsoft is truly moving toward a cloud-based future. 

Industry analyst MauroNL also pointed out how the Activision Blizzard purchase price is now valued at $75.4 billion, pushing the already record-breaking sum even higher. The net impact of the deal is a decent $2.1 billion in revenue but a $437 million operating loss.

The bigger picture of Microsoft's gaming arm

Activision Blizzard games
Click to enlarge
Image via Activision Blizzard

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Microsoft CEO Satya Nadella is clearly impressed with gaming's impact and explained, "This quarter we set all-time records for monthly active users on Xbox, PC, as well as mobile, where we now have over 200 million monthly active users alone, inclusive of Activision Blizzard games."

There was also a 44% year-over-year increase in cloud streams, while Microsoft CEO Amy Hood forecasted the following for the next quarter: "In gaming, we expect revenue growth in the low 40s, including approximately 45 points of net impact from the Activision acquisition."

Addressing the elephant in the room, Phil Spencer and the other Xbox head honchos are in the firing line following the surprise announcement of 1,900 layoffs. Affecting all facets of Microsoft's gaming arm, the ABK deal was originally to blame for these losses.

We then realised these workers were among those being shown the door. In particular, Call of Duty studios like Sledgehammer Games have been hit hard. Still, gaming is now Microsoft's third-biggest revenue stream, contributing $7.11 billion and overtaking Windows' $5.26 billion.

Boasting about growth in gaming, and with Spencer's grand ambitions to grow further, it's probably not the best time to be hyping your own successes when nearly 2,000 people have just lost their jobs. Still, it seems like it's business as usual over at Microsoft.

Tom Chapman
About the author
Tom Chapman
Tom is Trending News Editor at GGRecon, with an NCTJ qualification in Broadcast Journalism and over seven years of experience writing about film, gaming, and television. With bylines at IGN, Digital Spy, Den of Geek, and more, Tom’s love of horror means he's well-versed in all things Resident Evil, with aspirations to be the next Chris Redfield.
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