Xbox revenues up 49% following Activision Blizzard acquisition

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The fruits of Microsoft's Activision Blizzard acquisition have been shown in its financial results for the previous quarter, with Xbox revenues showing year-on-year growth of 49%.

The company brought the Call of Duty publisher into the fold when the $68.7 billion deal was completed in October, adding hundreds of games and millions of users to its gaming business – although this also increased its operating expenses.

While the Activision Blizzard takeover boosted Microsoft's gaming business, the overall financial results for the three months ended December 31, 2023 are still largely driven by AI, cloud and other non-gaming sectors.

Here's what you need to know:

The numbers

• Revenue: $62 billion (up 18% year-on-year)
• More Personal Computing (incl. Xbox) revenue: $16.9 billion (up 19%)
• Operating income: $27 billion (up 33%)
• Net income: $21.9 billion (up 33%)

The highlights

As stated above, Activision Blizzard helped grow Microsoft's gaming revenue for its second quarter by 49% when compared to the same period in the previous year. Xbox content and services revenue was up 61% year-on-year.

That's significantly more than the growth shown by the next biggest segment of its More Personal Computing division (which includes Xbox), with Windows OEM revenue only growing by 11%.

The addition of ABK helped push More Personal Computing revenues up 19% to $16.9 billion, and total company revenues up 18% to $62 billion.

During Microsoft's earnings call, chief financial officer Amy Hood said that gaming revenues were "in line with expectations as stronger-than-expected performance from Activision was offset by the weaker-than-expected console market."

Microsoft CEO Satya Nadella stating during an earnings call that Xbox reached an all-time record number of monthly active users across Xbox, PC and mobile at over 200 million. Again, this is primarily thanks to Activision Blizzard and, in the case of mobile, the inclusion of Candy Crush creator King.

Nadella also revealed that the number of hours streamed by users of Xbox Cloud Gaming rose by 44%.

Xbox hardware revenue was up 3%, suggesting another decent holiday sales period for the console, although Hood expects this to decline year-on-year in the next quarter (three months ending March 31, 2024).

The Activision Blizzard acquisition has also had an impact on Microsoft's total operating expenses, which rose by 38% year-on-year. A breakdown of the net impact from the deal suggested ABK adds operating expenses of $1.59 billion, with an operating loss of $440,000.

The net impact of ABK on Microsoft's overall revenue was reported as $2.08 billion, although it's noted this included moving Activision's revenues from third-party reporting to first-party.

Microsoft announced last week that it was laying off 1,900 people from its games division, roughly 9% of its gaming workforce.

The company also showed off its line-up of first-party title for 2024, including Indiana Jones and the Great Circle and Obisidian Entertainment's Avowed.