Microsoft Gaming Revenue Grows 44% Year-on-Year; Xbox Hardware Down 42%

Microsoft announced its financial results for Q4 of the fiscal year 2024 including an update on its gaming business.

[purple101]

“Xbox content and services revenue grew 50% year-on-year. 44% of that comes from the acquisition of Activision Blizzard”

So Xbox grew 6%

There, I translated it for you.

[Reaper22_]

Lol..nice try but wrong. For all the naysayers who always saying Microsoft isn't making any money make sure you read the whole article. The Activision deal was a smart move by Microsoft and it's paying off already.
Revenue and operating income up 15%. Gaming revenue up 39%. Now who's says they can't sustain gamepass? Still proving so many wrong here.

[QuantumMechanic]

You're pretty cavalier for someone who doesn't interpret the numbers correctly. Nobody claimed MS doesn't make money. We've asserted that there is no evidence that Xbox makes money---which is supported by this very financial statement! In this document, we learn that Activision would have made ~$300M last quarter if it were still a separate entity. Bottom line: Xbox *may* post a small profit next quarter by absorbing Activision's income, but having spent $75B for it! Just a couple more decades!

[fr0sty]

They aren't making a penny of "profit" off of the acquisition until the acquisition has paid for itself. We're still a long, LONG way away from Activision giving them nearly $70B.

The fact that Xbox hardware is down from last year's already dismally low numbers further drives the nail into the coffin... Microsoft does have a path forward as a publisher, but at this point, them investing billions into hardware no longer makes sense. It is not driving their software, the majority of their games are selling either on PC or on other consoles (now that they bought Bethesda and Activision).

[crazyCoconuts]

There are two sets of numbers in the article, making any hope of discussing them logically in this forum hopeless.
Suffice it to say that revenue is largely increased due to Activision, and console sales are unambiguously taking a big nose dive.

[Michiel1989]

just saying your revenue is up because you spend an equal amount of money to make a a large town from, to buy a company, is not what I call paying off already.

[itsmebryan]

@purple
Just for comparison, what are the numbers for Sony and Nintendo?

[BehindTheRows]

Wait until they reveal them.

[--Onilink--]

Pretty poorly translated though, seeing how even when quoting you still put the wrong numbers…

44% gaming revenue increase, 48% of that increase was due to ABK, thats what the article says.

So Xbox grew ~22%, not 6% (if you want to take away ABK from the equation, which I’d say is a valid take seeing how its basically revenue that has to make up for the purchase)

Tbh, the fact that they grew 22% despite their hardware dropping 42% is still quite impressive (leaving aside that being from a low performing position technically can also make it “easier” to increase YoY)

That said, dropping hardware numbers that were already low, and by that much, is still an abysmal metric for MS, so it still feels like a net loss to me.

[Lightning77]

42% drop is very bad. I'd say the next gen is their last final go tbh. They're telling ppl no hardware needed with the fire stick. They've been conditioning ppl this whole time for 4 years they don't need an Xbox. I can't see any improvements in hardware sales next gen, in fact it might be worse. If the rumored hand held Xbox console does release alongside the main console, I can see that handheld taking off in a major way outshining the Series 2 by a long shot. Plus possibly key games going multiplat, doesn't bold well for them. Them acting cheap and not advertising in key Areas where it matters is laughable and pathetic. A long lost of problems that MS themselves created mind you.

I know I'm dooming and glooming these are great numbers for every other section in gaming but that hardware is bad, then again they're not hurting from low hardware sales which is good I guess but this puts no confidence in continuing console for a long haul I just can't see that happening.

[--Onilink--]

@Lightning

I 100% agree. A 42% drop in hardware is an absolutely horrendous metric, one that in other businesses would likely mean changes at the top.

That said, the fact that they still somehow managed to have growth in gaming revenue despite such a large hardware drop is commendable , if anything because you wouldn’t really expect any growth at all with such a dire hardware situation

And as I mentioned, just examining the 22% increase overall on its own probably doesnt say much either, since you have to base it against an already somewhat poor baseline with Xbox numbers this gen

[tajawew]

Revenue is not profit quit talking about them like they are the same. And they just spent 100b+ to close abk.

[--Onilink--]

@tajawew

Care to show me where exactly am I discussing profit in any way?
Even more so, where I’m equating profit to revenue?

Because I’m pretty sure the word profit is not mentioned a single time in my comment, which I’d say is pretty normal, given that not a single thing I commented about has anything to do with it.

I just corrected purple because he decided to completely change the numbers in his quote in order to make up the 6% increase figure because it fits more into the fanboy narrative.

You cant really come up with that kind of comments when using the actual amounts in the article

[attilayavuzer]

@tajawew

And an investment is different than an expense. That 70 billion didn't disappear, it transferred to an asset they acquired. Same as buying a house. If you have 500k and spend 300k on a house worth 300k, your net worth isn't 200k, it's still 500k. Now, they overpaid for ABK a bit, but beyond that handful or billion, actual profit will be realized quickly.

[Petebloodyonion]

But ABK is part of the equation. Do we assess Sony's performance by removing studios like Insomniac or deals they made with 3rd parties? Also, why do people always need to bring up that MS paid 70 billion, when the real term is investing? Last I checked ABK was worth something and could be resold.

[--Onilink--]

@Koektollie

Here is the literal quote from the article:

“ According to the financial documents of the More Personal Computing Business, which includes the gaming segment of the company, Gaming revenue grew 44% year-on-year. 48% of that growth came from the acquisition of Activision Blizzard.”

48% from ABK out of 44% gaming revenue increase… did you even read the article?

Unlike purple, I’m actually using the numbers from it instead of making up my own.

As for how they would have 22% increase YoY, again, if the baseline was already low, increasing 22% might not be that hard anyway, I cant really say why there was an increase

[Brazz]

Read the report, you are wrong.

[Brazz]

On the Gaming side Revenue was up 44%, but with 48% percent of the growth coming from Activision Blizzard- meaning they would be down in revenue without them, Xbox is 4% down, ABK is the one in the Green.

[SimpleDad]

How old are you?

[--Onilink--]

@SimpleDad

Apparently math is hard over here in this site haha. The fact that there are 11 likes to the comment (so far) just makes it more mindblowing

Brazz, if you saw a revenue increase of 44% and 50% of that comes from ABK, that means its:

22% ABK
22% other sources

It still means there was a 22% increase overall if you dont want to include ABK.

Whether a 22% increase is praise worthy or not given how poor the numbers overall are anyway is a separate topic

[Petebloodyonion]

I invest my money in an apartment building with 20 units. I have a 25-year mortgage. People pay me rent, which is considered recurring revenue, and the building itself gains value, known as equity. In the end, no one would say something as uninformed as 'You won't make money until you've paid off the entire mortgage.'" or that recurring revenue shouldn't be accounted for your performance because....

[jwillj2k4]

Terrible analogy. Microsoft has no mortgage on this purchase since they bought them outright. Nothing to default on. On top of this, they are in the process of devaluing the “building” by kicking out tenants (employees) and demolishing the rooms (games). Investing 101, whose going to want to buy ABK at the price microsoft paid after microsoft “renovates” it. I mean in your words it’s an investment, right?? They can’t even break even on this.

[QuantumMechanic]

Quite simply, something is only worth what someone else is willing to pay for it. MS severly overpaid for ABK; the excess is called "goodwill" in corporate accounting. MS will eat that goodwill margin. No other company on this earth will pay $75B to buy ABK. Therefore, ABK has already depreciated in value.

[Einhander1972]

The thing that you guys ignore is that the cost to produce new software and maintain the hardware and pay all the employees ect. can still be higher than the revenue. Meaning that they can make or even grow revenue and still be losing money.

To use your example, if you are a landlord and you have to do repairs that costs more than you take in, in rent, you are losing more money than you are taking in.

And if you took out a loan or even spend your own capitol, before you are making any profit from rent you have to subtract the costs of your investment. Many people and companies have spent themselves bankrupt by over extending on investments that didn't pay off.

And obviously Activision isn't an equity, it doesn't gain value over time. And equity certainly isn't a guarantee, property value can decrease and the cost of the building can also lower in value as it ages or cost more to maintain than tenets are willing to spend for an older building especially if newer properties are available at reasonable cost nearby.

[Petebloodyonion]

@Jwili2k4
"Microsoft has no mortgage on .."
Because MS had 70 billion in cash laying around in a box and didn't finances the transaction via secured loans in order to create tax deductions like any major conglomerate would do.

@Quantum
I'm sure MS overpaid for ABK despite that three other companies shown interest into buying ABK in fact it was so overpriced that Sony tried to block the deal Microsoft by all means it in order to protect MS from losing so much money.

@Enhander
Did I mentioned profit? (I did mentioned revenue)
But your explanations is correct and work ether with MS regarding ABK deal.
ABK by default is worth something simply because 3 others companies were interested into buying them sure ABK does not have a physical value but it has intellectual value
and as you perfectly said the value can go down if not correctly attended just like your house value can go down if you don't do the proper maintenance.
I give you props at least you seems to have basics knowledge on how to read financial reports.

[mynd]

44% of 50% is 22% which means they grew 28%.

Math not your strong suit there champ.

[HyperMoused]

This is beacuse they want to become a Software company, not a Hardware company, every move they make is to kill of the physical side, Xbox is dead,long live MS studios, fans just dont see it yet.

[pwnmaster3000]

Honestly Xbox fans don’t want to admit it but I think that is the best way for Xbox. To become a software service. It’s what they are known for.

Imagine Sony and MS joins up.
Sony hardware and MS software.
That would be dope asf.

[purple101]

Sony have said before they are going all in on PlayStation
It’s their most popular and profitable sector, even more so than music movies and tv / electronic sales.

They are backing this up with multiple tv series to promote their ip

They are about to release ps5 pro

But yeh Sony hardware going away, whatever bro. That ain’t even remotely close to what’s going to happen

[just_looken]

Wow are you ever out of the loop there are already microsoft games on playstation 5 right now with halo coming out in the next year or so on playstation 5.

https://www.theverge.com/20...

[Charlieboy333]

"Imagine Sony and MS joins up.
Sony hardware and MS software.
That would be dope asf" Not really since Sony provides way better software than MS as well. MS brings nothing of value to the table.

[badz149]

@pwnmaster3000

I don't know which universe you're from but...

"Imagine Sony and MS joins up.
Sony hardware and MS software.
That would be dope asf."

LOL! how many GoTY winners have MS made since the last 2 decades? ZERO! their last real GoTY win was Halo CE and since that...almost nothing!

[crazyCoconuts]

They are certainly not known for GOOD software. Besides the crappy games we have Windows and Office.

[darthv72]

...but Microsoft has ALWAYS been a software company. They only have a hardware division as a convenience option. It isnt their main bread and butter. Now that xbox is moving beyond the confines of a singular plastic box.... they know that to make more $$ is to expand to other means of delivery. This includes cloud, mobile and even other platforms while also servicing their own.

It (very loosely) reminds me of the SNK days when they would release games for systems like PS2 and GC and XB but also for their own Neo Geo arcade/home systems. They were covering all sorts of bases and making $ off each one.

[StormSnooper]

What?do you live in an alternate universe? Xbox is “only a convenience option”? Since when? Talk about moving those heavy posts so far out of the stadium.

Incredible! Just, incredible! You heard it here folks.

[HyperMoused]

Thing for me is selling out the xbox brand is selling out its fans, i already moved to PC, stopped my subs to MS, and now instead of buying the exclusives that come out, i probably will buy less MS games if im honest, and xbox was a name in every home, that will die also. they have went the wrong way for sure imo.

[Reaper22_]

The hell you mean they want to become a software company? They've
always been a software company. 🤣Hardware doesn't make as much money as the software and services side. Why you think Sony was terrified of them getting Activision? The revenue from just COD is massive.

[crazyCoconuts]

I think Sony was terrified because MS could use COD to potentially force a large part of their user base on to Xbox (as a platform).
If Xbox abandons their hardware, they abandon their platform, and this ceases to be a big risk imo. MS will need Sony as much as Sony needs MS. Xbox would just be big publisher of games. The big news here is how the hardware keeps tanking, because if MS abandons hardware, Sony is sitting pretty for a while

[pwnmaster3000]

Hopefully they can repair that nightmare activision and blizzard.

[Plague-Doctor27]

ABK is the only thing keeping them afloat. Without them they would be down 4%

[ChasterMies]

The earnings report from Microsoft is here: https://www.microsoft.com/e...
From the report, “Xbox content and services revenue increased 61% driven by 58 points of net impact from the Activision acquisition”. So Xbox content and services revenue increased 3% without Activision.
Also from the report, “Devices revenue decreased 11% (down 9% in constant currency)”. This includes Surface hardware and Xbox hardware.

[purple101]

Imagine the numbers for next year.
By then they (may) be giving all activision games on gamepass, so this extra profit / revenue in this case will be non existent

Wel, maybe a few PS and steam copies will be sold. And they take their 30% breadcrumbs

[ChasterMies]

Adding Call of Duty to GamePass is a gamble. Microsoft is betting they will get more money from CoD players subscribing to Game Pass Ultimate $240/year than they will lose from Game Pass Ultimate subscribers avoiding a $70 purchase.

[Reaper22_]

You really don't understand how this works. Even if the game is on gamepass they'll still make money. You think just because the game is on gamepass people won't buy it. I got news for ya. Some people will still buy the game because they wanna own it. Don't for get Playstation gamers are also going to buy it also.Gamers can be petty but I don't think they'll stop enjoying the game just because it's owned by MS.

[IRetrouk]

Last 3 quarters for acti have been losses, what you think is gonna happen when their games get added to gamepass?

[Reaper22_]

Lol...you obviously don't understand the info in the link. You guys are so blinded by your disdain for anything Microsoft that you are just making shit up. The increase is not 3 percent without Activision. Gamepass it self was already profitable before they purchased Activion. So no, your wrong.

The only thing down is hardware sales which we already knew.
Overall revenue is up and yes they are making profits. This was already reported at the start of this year. Microsoft makes a lot of money on software and services. Sony could sell 300 million ps5s and Microsoft would still be 20 times richer.

[BehindTheRows]

Xbox is making profits? Where? What is the figure?

And the Sony argument is even more comical. PlayStation makes Sony money (operating profit). Xbox does not. But, according to you, it does. So, I’ll await those figures.

[IRetrouk]

You aint gonna get em cause they don't exist🤣

[PhillyDonJawn]

Kinda wild, hardware waaay down but revenue waaay up. It's kinda scary to think about cause this could lead to a consoless future. And idk if that's something I wanna see.

[Jin_Sakai]

This is a Xbox problem. Sony and Nintendo consoles are selling very well. They also have great games unlike Xbox.

[PhillyDonJawn]

Money talk bs walks. If xbox profits more Sony will sure follow suit. They already have. They've put their games on PC and restructured their game services to compete with gamepass more. Xbox hardware and game sale are supposedly down yet bringing in massive amount of revenue yoy.

[Reaper22_]

But only only of those is making a lot of money from that hardware and it isn't sony.

[Reaper22_]

It's been that way for a long time. Nintendo has always made more money from their hardware than Sony or Microsoft. Especially in the first few years after release.

[Einhander1972]

The mandatory reminder that revenue is not profit and a company can be positive in revenue and losing money.

That is what subsidization is.

Congratulations on the price increases, I hope you weren't part of layoffs or studio closures.

[Einhander1972]

To add some perspective.

FY23 Q4 period ending June 30, 2023, Xbox hardware revenue was down 13%.

In the FY23 Q3 period, Xbox hardware revenue was down 30%.

Xbox hardware isn't just down it's down over last year where they were also massively down.

[ChasterMies]

Unlike hardware, content and services has great margins, i.e. lots of profit potential. That’s why Microsoft’s CFO is ready to ditch Xbox hardware and sell games on PlayStation and Nintendo.

[RhinoGamer88]

Phil is a genius! Give him and his C suite bros more stock options, raises, and bonuses!

[Einhander1972]

"RhinoGamer885m ago
Phil is a genius! Give him and his C suite bros more stock options, raises, and bonuses!"

You guys are the worst.

He closed four studios fired more than 2500 people and raised prices to their consumers (you) and you are cheering on executive bonuses...

Actually disgusting...

[StormSnooper]

I think he was being sarcastic.

[Einhander1972]

"I think he was being sarcastic."

If that is the case then I apologize, though, there are people here who say this seriously.

/s next time...

[Lightning77]

Yeah stop getting so emotional over faceless companies.

Nobody is innocent should I start listing what Sony did this year? I dunno, knowing you might shed tears or get red in the face with anger. Because they are your identity.

[Einhander1972]

Lightning77
https://n4g.com/news/260557...

Lighting, remember this... look whos talking.

You got wrecked so hard that you hid from the site for a week then started harassing me on alt accounts, now you just sit back and snipe at me like this and what you did in the other article a few days ago...

Ya know, maybe he's being sarcastic maybe not. But at least I apologized if I was wrong, unlike you who died on a dumb hill then sent me a PM because you didn't have anything left to say.

[BehindTheRows]

Yeah, him talking about “emotion over faceless companies” is just sheer comedy.

In any event, Xbox hardware is in trouble. MAJOR trouble. Nothing new here. I’m just waiting to see what their next big software move is, because Xbox’s console clock is ticking louder than ever!

[The Wood]

lol got em

[PassNextquestion]

Considering we over the half way mark of the generation we shouldn't be seeing a increase in hardware sales. The only way you see a surge of sales this late in the generation is if the price of the consoles reduced dramatically, which won't happen this generation.

[Destiny1080]

sounds like phil is killing it

[dveio]

Four financial quarters have been officially reported. Now let's wait for their final report of the complete fiscal year.

My personal conclusion:

The Xbox brand would have been nothing financially without the numbers from their acquisitions.

Which is sad, but also true.

I won't go into the fact that every of the four quarter reports had a loss in operating income due to expenses. Which are likely going to mount up to ~$2bn operating income loss in their FY report.

So in total, Microsoft spent an estimated $80bn (excluding (!) GP day-one deals with third parties and ID@Xbox investments) over the past 5 years.

Mounting up to a Xbox software revenue increase of ~45% in average in the first year of combined numbers. Minus before mentioned operating income losses of ~$2bn due to acquisition expenses.

At this point in time, I really wonder who saved who.

To me it looks like ABK & Zenimax saved Xbox (which is actually the reason for the acquisitions).

And Playstation is also stepping in to save them with superior CoD numbers for decades and Xbox "first-parties" getting released on PS5.

Damn. What a disaster.

I'll eat popcorn and chewgum when their next FY quarter reports will arrive.

Can't wait to see their tiny revenue increases or even losses compared to this first year of combined numbers.

PS:

I also place a bet that even Indiana Jones won't save them this year.

First and foremost because it's a day-one GP release without barely any box office revenue.

And because it's only going to have a 60/70, maybe low 80' MC and OC score.

[Hofstaderman]

You guys do you realize you are debating with a deluded individual who is so traumatized by XBOX's sound thrashing his psyche has splintered into multiple personalities all egging each other on in responding to his own multi account posts in this article?

[dveio]

Yes! ☺️

I always just imagine it as the infamous David Letterman interview with Joaquin Phoenix on 'The Late Show'.

Us being Letterman, him/her disillusioned Phoenix.

[anast]

Less than 10% growth even after buying 1 past their prime company that spent too much time developing loading screens, one that reskinned Diablo Immortal, and one that puts out CoD sewage every year... imagine that.

[talocaca]

Spending $70 Billion to increase revenue.....where's the profit?

[Profchaos]

Why did half the comments on this article get marked as spam when they absolutely were not spam when I looked a few hours ago

[Brazz]

"Despite the poor Xbox hardware revenue, gaming revenue at Microsoft is up 44 percent overall, helped again by the additional Activision Blizzard revenue. In fact, that revenue added 48 points, so overall gaming revenue at Microsoft would have been down 4 percent if the company hadn't acquired Activision Blizzard."

[Kekewei]

No wonder Microsoft are giving up exclusive strategy. They can't resist the temptation of going all platforms now. It was the ABK acquisition that dealt the final blow to Xbox hardware... who would have thought

[jznrpg]

Their revenue is up only because of buying ABK but they spent 60 billion or whatever it was to buy ABK so their profit kaput for a good long time

[TwoPicklesGood]

Good on them. Competition is great and will keep PS on their toes so hopefully they don't F up 2025 like they did this year with first party games.

[ocelot07]

Wasn't Xbox hardware down 30% in Q3? They might as well just discontinue Xbox consoles. Or start giving them away with every ps5 sold or a box of cornflakes or something.

[franwex]

They obviously don’t want to move hardware as there has been no price drops. If anything they are increasing the price.

[gold_drake]

imagine one of your business divisions profit, comes from one singular dev team, while everything else fails miserably.

[Phoenix76]

The mathematical number flipping done by MS is incredible. I can do magical number flipping too.
How about 2.7% against 4.3% for example. The increase is only 1.6% total. But let's flip that number and say that the difference between the two is a staggering 60%!

See.... Magic

[__y2jb]

The fact they only ever talk about revenue and never profit / loss tells you everything you need to know about how well xbox is doing.

If they were even close to profitable they would be screaming about it.

[wesnytsfs]

Software makes the company more money. they sell consoels at loss or breakeven with hopes sofware sales make that up. Nintendo usually makes oney on their consoels fromt he get go however. Least that is how it worked when i worked a video game store in my younger years.

[HyperMoused]

Pretty sure thats right with Nintendo, its why they are so expensive for what they are

[RiseNShine]

If it's going so good, why are they firing everyone and their mother?

[HyperMoused]

Happens when any company is taken over, usually its a management change, structure change, firing people to fit the new structure...they usally over fire and then realise they need to hire more people once things settle.

[XBManiac]

So... if Microsoft continue with the same expend as now... and the same income... they will recover Activision-Blizzard invest in... ~20 years?

[rlow1]

Well buying these companies did the trick. That’s why companies acquire to gain market share or narrow the competition.

[Flewid638]

I'm exclusively a PlayStation and PC guy. In 35+ years of gaming I've only enjoyed 3 Microsoft games ever.

With that said, they killed it during Xbox Games Showcase 2024. First time in history they have multiple titles on the horizon I'm eager to follow.

[XiNatsuDragnel]

At this go third party publisher xbox ngl the physical consoles for Xbox are gone.

[purple101]

I think when you sign up for a new account on N4G there should be a 5 day mandatory curfew on commenting.

This would stop one person creating multiple accounts to comment on his own comments