Microsoft has recently addressed claims from a report suggesting that their takeover of Activision Blizzard hasn’t significantly impacted Xbox Game Pass or its broader gaming operations. The tech giant disputes this, pointing to sustained revenue growth from Xbox content and services starting in the second quarter of 2024 as proof against such reports. Fans and industry watchers can look forward to more detailed updates on Microsoft’s gaming performance in their next financial disclosure, set for January 29.
The monumental acquisition of Activision Blizzard was finalized by Microsoft in October 2023, with a whopping price tag of $68.7 billion, marking it as the largest deal in not just the gaming sector but the entire tech industry. Fast forward 15 months, a report from The Information suggested that the impact of this acquisition has not matched Microsoft’s internal forecasts. Denny Fish, a portfolio manager managing nearly $800 million in Microsoft shares, expressed disappointment in Activision’s performance post-acquisition. The report accuses the acquisition of falling short in boosting Xbox Game Pass growth and having little effect on Microsoft’s gaming section overall.
Microsoft responded to these assertions by insisting on added context. A spokesperson for the company told Insider Gaming that since the second quarter of 2024, there has been notable growth in Xbox content and services revenue, attributed largely to the Activision Blizzard merger. Over the last nine months, the gaming segment’s revenue jumped by 61%, with 55 points of that growth directly resulting from the acquisition, according to the representative.
The notion that the $68.7 billion deal didn’t benefit Microsoft’s subscription service has also been contested. Evidence to counter this was unveiled back in October 2024, when CEO Satya Nadella noted that Black Ops 6 broke records for new Xbox Game Pass subscribers on its launch day. This game was also touted as the most significant Call of Duty release ever. Since the second quarter of 2024, Activision Blizzard has reportedly contributed to about 85% of the growth in Microsoft’s gaming revenue.
Furthermore, The Information speculated that Microsoft had, at some point, thought about leaving the gaming market, citing comments allegedly made by Nadella back in 2021. Microsoft has outright denied these claims, stating they have never considered such a move. Although there has been a decline in Xbox hardware revenue, they report that user engagement on their gaming platforms is at an all-time high.
Anticipation is building for more current insights into Microsoft’s gaming division performance. We’re expecting these updates on January 29 during the release of their consolidated financial report for the second quarter of fiscal year 2025, covering October 1 through December 31, 2024.
In related content, Xbox Game Pass Ultimate continues to offer great value within the Xbox ecosystem by providing access to over 100 games with a single subscription.
