Xbox Revenues Surge, Hardware Sales Drop

Microsoft's financial performance for the first quarter of 2024 has showcased significant growth, with overall company revenues increasing by 17% to reach $61.9 billion, and profits climbing by 20% to $21.9 billion. The video game division stood out as the fourth highest revenue generator, following Servers, Office, and Windows.

This division reported a remarkable 51% revenue increase, totaling $5.451 billion. The substantial rise is attributed to the integration of Activision Blizzard's revenues following their acquisition in October last year. Without Activision Blizzard, Xbox would have seen a 4% decline in revenues compared to the same period last year.

The decline in Xbox hardware sales, which fell by 31%, was noted as a significant factor in this performance, aligning with company expectations. This was largely due to decreased console sales.

However, software and service sales remained stable, with a minor 1% increase excluding Activision Blizzard. With the addition of Activision Blizzard, the surge in content and service sales jumped to 62%.

Also Read: Xbox Soars with 49% Revenue Boost Post-Activision Buy

Out of the $5.4 billion generated by Xbox this quarter, Activision Blizzard contributed $1.970 billion or 36%. Yet, this acquisition also resulted in a $350 million loss for Xbox due to associated purchase costs and operational expenses. 

CEO Satya Nadella highlighted the expansion of their gaming portfolio to new platforms, including the release of popular games like Pentiment, Hi-Fi Rush, Grounded, and Sea of Thieves on Nintendo Switch and Sony PlayStation for the first time.

CFO Amy Hodd projected a further decline in hardware sales next quarter but anticipated a 50% increase in content and services revenues, with a significant contribution from Activision Blizzard.