Microsoft achieves 49 percent more gaming turnover thanks to Activision Blizzard acquisition

Microsoft achieved 49 percent more revenue with its gaming division in the second quarter of the 2024 financial year than in the same quarter last year. 44 percentage points of that increase were achieved thanks to the acquisition of Activision Blizzard.

In the quarter in question, from October through December 2023, Microsoft achieved total revenue of $62 billion, of which nearly $22 billion counts as net income. These are respective increases of 18 and 33 percent based on the GAAP principles. This was the fifth consecutive quarter that Microsoft achieved record revenue and the first quarter to include Activision Blizzard’s financial results, as Microsoft and the gaming company completed the acquisition in October 2023.

Not only the gaming department owed a significant increase in turnover to the takeover. The Xbox content and services department, which also includes Xbox Game Pass, recorded a 61 percent increase in revenue, of which 55 percentage points are directly attributed to Activision Blizzard. Xbox hardware sales rose 3 percent.

By the way, the company is not yet making a profit, purely based on the results from Activision Blizzard. In addition to the acquisition costs, Microsoft incurred more than $900 million in transaction and integration costs, on top of other operating costs. According to a explanation from CEO Satya Nadella, among others the company is currently making an operating loss of around $440 million with Activision Blizzard alone.

All Microsoft departments, with the exception of the Devices division, recorded higher revenue in the past quarter than in the same quarter of the previous year. The cloud departments in particular, including Microsoft Cloud, server and cloud services and Azure and other cloud services, achieved high revenue increases of between 22 and 30 percent. This does not apply to the Office and consumer cloud services, because this division recorded 5 percent more turnover. In addition, the Windows, Windows OEM and LinkedIn departments recorded between 9 and 11 percent more turnover.

The only department that recorded less turnover was Devices, responsible for Surface devices. Microsoft already announced in previous quarterly earnings reports that revenue from its own hardware would decline. The PC market is said to have returned to pre-corona pandemic levels, but for unknown reasons this does not apply to the Surface product line. The company expects another turnover decline of at least 10 percent for the next quarter.