It seems that the results of Microsoft’s recent purchase of Activision Blizzard have already started to show. The company’s latest financial reports indicate an almost 50% rise in Xbox revenue as well as record monthly active users.
With the 68.7-billion-dollar takeover having been finalized in October, Microsoft has officially added dozens of titles and franchises – and by extension millions of players – to its already impressive library of games. This includes the world’s best-selling video game franchise, Call of Duty.
It should be mentioned though, that even with the substantial boost to Microsoft’s gaming division from the Activision Blizzard acquisition, the lion’s share of profits from Q4 of 2023 came from Microsoft’s non-gaming avenues, such as AI and cloud-based systems. There are also the increased operating expenses that go along with such a large takeover.
Overall, the financial report breaks down as follows; Microsoft’s total revenue was $62 billion, which is an increase of 18% compared to 2022. Revenue from Xbox and Personal Computing was up 19% to $16.9 billion. Operating income is up 33% to $27 billion and Net income is also up 33% to $21.9 billion.
Microsoft’s gaming revenue is up by 49% compared with the figures from the same period in 2022, while revenue from Xbox content and services has also increased by just over 60%. These increases are in large part due to the acquisition of Activision Blizzard.
The incorporation of Activision also played a significant role in the aforementioned 19% increase in revenue in Microsoft’s More Personal Computing division. Compared with the 11% revenue growth from the Windows OEM (original equipment manufacturer) subdivision – which also includes Xbox – it is the most growth shown by any segment in the entire More Personal Computing sector.
Despite the multiple revenue growths across several departments, it is more-or-less in line with Microsoft’s expectations, as the strong performance from Activision was balanced out by the weaker-than-expected console market.
With that said, 2023 was an excellent year for Microsoft as Xbox enjoyed all-time record numbers of monthly active players across Xbox, PC, and mobile platforms. This included more than 200 million new users and a roughly 45% increase in the number of hours users streamed using Xbox Cloud Gaming.
Activision Blizzard also played a large part in this – especially in the mobile gaming department – thanks to the ever-popular Candy Crush. To round things off, hardware sales on Xbox consoles were also up 3%, thanks to a successful sales period during the holidays. However, this is expected to decline again during the first quarter of 2024.
The takeover of Activision Blizzard wasn’t all smiles though, as the long-drawn-out merger also affected Microsoft’s total operating expenses for the year. Estimated reports suggest that the net impact from the deal now raises Microsoft’s operating expenses by 38% to $1.59 billion, with an operating loss of $440,000.
With another successful year now in the books, 2024 might prove to be a polarizing year for Microsoft. Although it has a greater influence on the market with the Activision acquisition and several anticipated titles set for release soon, such as Obsidian Entertainment’s Avowed and Bethesda Softworks Indiana Jones, it was also announced last week that 1,900 people will be laid off from its games department.
This is almost 10% of Microsoft’s overall gaming workforce and is yet another example of the substantial layoffs happening all across the tech, retail, and media sectors, to name just a few. What it means for Microsoft moving forward is hard to say, but stay tuned here to find out.