What you need to know
- Microsoft's financial results for FY25 Q1 are now out, detailing the company's earnings across various divisions.
- Gaming revenue is up 43% year-over-year, with this growth coming from the acquisition of Activision Blizzard King.
- Xbox content and services revenue is up 61% year-over-year, with most of the growth coming from the acquisition, while Xbox hardware revenue is down 29% year-over-year.
- Call of Duty: Black Ops 6 (which is not included in this quarter's earnings) set a franchise record for day one players and day one subscriber additions to Xbox Game Pass.
It's that time of the quarter where we get more financial results.
Microsoft shared details on its performance for FY25 Q1 on Wednesday, providing details on how the company's various divisions did during the quarter ending Sep. 30, 2024. For FY25 Q1, gaming revenue was up 43% year-over-year. Like in FY24 Q4, FY24 Q3, and FY24 Q2, this massive leap on paper is due to Microsoft's acquisition of Activision Blizzard King, which finalized just over a year ago on Oct. 13, 2023.
Xbox content and services revenue saw a leap of 61% year-over-year, with most (but not all) of that growth coming thanks to Activision Blizzard King. This quarter saw the launch of multiple major third-party titles, including EA Sports College Football 25 and Warhammer 40,000: Space Marine 2. Xbox hardware revenue was down 29% year-over-year. Xbox Series X sales are finally overtaking sales of the Xbox Series S in the U.S, per the September 2024 Circana report.
Speaking on an earnings call accompanying the financial results, Microsoft CEO Satya Nadella shared that Call of Duty: Black Ops 6 was the largest Call of Duty launch ever in day one players. Call of Duty: Black Ops 6 also set a new record for the number of Xbox Game Pass subscribers added in a single day, a title previously held by Bethesda Game Studios' Starfield, which launched back in September 2023. Meanwhile, unit sales of the game were up 60% on PlayStation and Steam.
"Last week’s launch of Black Ops 6 was the biggest Call of Duty release ever, setting a record for day one players, as well as Game Pass subscriber adds on launch day. Unit sales on PlayStation and Steam were also up over 60 percent year-over-year," Nadella said.
The impact of Call of Duty: Black Ops 6's launch results will not be accounted for in Microsoft's earnings until next quarter.
Microsoft as a whole saw $65.6 billion in revenue for the quarter, which is up 16% year-over-year.
How did acquiring Activision Blizzard King change Xbox revenue?
Over the last year, we've seen several Microsoft earnings with massive year-over-year increases in gaming revenue.
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This is because ever since the acquisition closed, Microsoft has now accounting Activision Blizzard King as first-party, rather than the prior third-party relationship. This gave Microsoft control of massive franchises like Call of Duty, Candy Crush, Diablo, and World of Warcraft.
Microsoft has been slowly but steadily integrating the Activision Blizzard King portfolio into the greater Xbox ecosystem, launching recently Call of Duty: Black Ops 6 day one in Xbox Game Pass Ultimate and Xbox Cloud alongside the expected Xbox, PlayStation, and Windows PC versions of the game.
Looking ahead, Microsoft is continuing to build on a massive roadmap of first-party content across Activision Blizzard King, Bethesda Softworks, and Xbox Game Studios. In 2025, Microsoft is looking to launch Xbox titles like id Software's DOOM: The Dark Ages, Playground Games' Fable, and Compulsion Games' South of Midnight.
