M+E Connections

Microsoft: Q3 Xbox Revenue Got a Boost From Activision Acquisition

Microsoft’s revenue growth in its third quarter (ended March 31) benefited from the company’s acquisition of Activision Blizzard in October, it said April 25.

Xbox content and services revenue grew 62% in Q3 from a year earlier, “driven by 61 points of net impact” from the purchase of the third-party video game giant, Microsoft said.

Activision acquired Blizzard Entertainment in 2008 and King Digital Entertainment in 2016.

Now, with Microsoft’s acquisition of Activision, “we’ve added hundreds of millions of gamers to our ecosystem, as we execute on our ambition to reach more gamers on more platforms,” Nadella previously said.

Revenue in Microsoft’s More Personal Computing division, which includes Xbox, increased 17% from Q3 last year to $15.6 billion, the company said April 25.

Also contributing to that division’s growth was an 11% increase in Windows revenue, with Windows OEM revenue increasing 11% and Windows Commercial products and cloud services revenue increasing 13%, according to Microsoft.

“We are committed to meeting players where they are by bringing great games to more people on more devices,” Microsoft CEO Satya Nadella told analysts on the company’s Q3 earnings call April 25.

Microsoft “set third quarter records for game streaming hours, console usage, and monthly active devices” in the quarter, he said.

In March, Microsoft added its first Activision Blizzard title, Diablo IV, to the Xbox Game Pass service, Nadella noted. “Subscribers played over 10 million hours within the first 10 days, making it one of our biggest first-party Game Pass launches ever,” he told analysts.

“We’ve also been encouraged by the ongoing success of Call of Duty’s Modern Warfare III, which is attracting new gamers and retaining franchise loyalists,” he said. Call of Duty was one of Activision Blizzard’s best-selling video game franchises.

Microsoft is also “expanding our games to new platforms, bringing four of our fan-favourite titles to Nintendo Switch and Sony PlayStation for the first time,” Nadella pointed out. “In fact, earlier this month, we had seven games among the top 25 on the [online] PlayStation Store, more than any other publisher.”

Total Microsoft Q3 revenue grew 17% to $61.9 billion, while the company’s net income jumped 20% to $21.9 billion, with earnings per share increasing 20% to $2.94.

Microsoft’s “record third quarter [was] powered by the continued strength” of the Microsoft Cloud, which Nadella told analysts surpassed $35 billion in revenue, up 23% from a year ago.

Meanwhile, Microsoft Copilot and Copilot stack —”spanning everyday productivity, business process, and developer services, to models, data, and infrastructure —are orchestrating a new era” of artificial intelligence (AI) “transformation, driving better business outcomes across every role and industry,” he said.

Microsoft Azure once again took market share, as customers “use our platforms and tools to build their own AI solutions,” according to Nadella.

He told analysts: “Our AI innovation continues to build on our strategic partnership with OpenAI. More than 65% of the Fortune 500 now use Azure OpenAI Service.”

Nadella went on to say: “The number of Azure AI customers continues to grow—and average spend continues to increase. We also saw an acceleration of revenue from migrations to Azure.”

He added: “Azure Arc continues to help customers like Dick’s Sporting Goods and World Bank streamline their cloud migrations. Arc now has 33,000 customers, up over 2 times year-over-year.”