Xbox hardware revenue plummets

Microsoft

Microsoft’s latest financial report paints an ambiguous picture of its gaming operations. Overall, gaming revenue increased by 51% – largely thanks to Activision Blizzard, which contributed 55 points of net impact. That means Microsoft would have looked at a decrease in revenue for this quarter, had it not acquired the company.

Operating Activision Blizzard is still a net loss for Microsoft at the moment due to ongoing costs of the transaction, such as the integration of the company into the greater infrastructure – but a loss of $350 million USD is a measly sum compared to the company’s quarterly income of $21.9 billion USD.

The big stinker for Microsoft in this report is the state of Xbox console sales – hardware revenue plummeted by 31% compared to the already tame holiday sales in the last quarter. This stands in contrast to successes for Xbox-published games on rival platforms as well as the strength of Xbox Game Pass. Revenue from these sectors was up 62% with Activision Blizzard once again contributing generously – growth would have been a very moderate 1% without it.

Microsoft CEO Satya Nadela highlighted the company’s new strategy of distributing its games on more platforms: “We’re expanding our games to new platforms, bringing four of our fan favorite  games to Nintendo Switch and Sony PlayStation for the first time. In fact, earlier this month we had seven games among the top 25 on the PlayStation Store, more than any other publisher.”

Sea of Thieves, notably, topped the PS Store pre-order charts ahead of its release on Sony’s console.

Amy Hood, Microsoft’s CFO, predicted a further decline in console sales next quarter with more moderate growth in the other gaming sectors – with the impact of Activision Blizzard to increase further. 

Despite these setbacks, Xbox leadership repeatedly stated that Microsoft was not giving up on its console development.