Microsoft has released its financial report for the first quarter ended September 30, 2024. Here are the key takeaways about its video game business.
Call of Duty: Black Ops 6
- According to its earnings release, Microsoft’s gaming revenue grew in 43% year-over-year and reached $5.62 billion in the first quarter. Activision Blizzard contributed to the entire 43% of the growth.
- Xbox content and services revenue surpassed $5 billion, up 61% year-over-year. Without the impact from Activision Blizzard, it would have been up just 8%.
- When it comes to Activision Blizzard specifically, the subsidiary generated $1.69 billion in Q1 revenue. Its operating loss reached $440 million, in part due to its ongoing post-acquisition integration into Microsoft.
- Hardware revenue was down 29% to around $525 million due to decreased sales of Xbox consoles.
- During an earnings call, Microsoft CEO Satya Nadella noted that the company has set new records for monthly active users (MAU). Game Pass also set a new Q1 record for total revenue and average revenue per subscriber.
- Despite the record-breaking launch of Call of Duty: Black Ops 6, Microsoft expects it gaming revenue to decline “in the high single digits” in the second quarter due to lower hardware sales.
- The company also says its Xbox content and services revenue will be “relatively flat.” According to CFO Amy Hood, the main reason is that revenue from Game Pass subscriptions is recognized over time, not in the quarter of purchase.
- Another thing is that Black Ops 6 required online connection to play, meaning that “even for players who purchase the standalone game, revenue recognition will also occur ratably over time.”