Microsoft Reveals Impact of Activision Blizzard Acquisition on Xbox Gaming Revenue (2024)

Microsoft's latest quarterly earnings call with shareholders has revealed that its Activision Blizzard acquisition has bolstered the company's gaming division revenue for Q3, offsetting a number of otherwise negative returns. The Microsoft Activision Blizzard acquisition has endured a series of legal challenges across several countries, but it would seem the Xbox parent company's persistence has more than paid off.

A powerhouse in the technology and gaming industries, Microsoft first announced its efforts to acquire Activision Blizzard back in January 2022. The deal was not finalized until October 2023 and was met with a series of litigation from competitors and even the United States Federal Trade Commission. As it stands, Microsoft's acquisition was successful, and the company has been benefiting greatly from Activision Blizzard.

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Microsoft's Xbox Gaming division saw a massive 51% increase in revenue year over year for its Q3 earnings, with a majority of net impact coming directly from Activision Blizzard. Gaming revenue at Microsoft saw profits reach a record $5.45 billion, noting an increase of $1.8 billion compared to the previous fiscal period. However, it was revealed that the Activision Blizzard acquisition accounted for a majority of the revenue boost, with all other Xbox content and services actually netting a 4% loss. Similar trends were reported last quarter, when Microsoft became a $3 trillion company while simultaneously laying off hundreds of staff. Whether those layoffs contributed directly to the latest earnings was not specified in the shareholder call, though many fear Microsoft may continue its workforce reductions if it wishes to continue to repeat the success of its recent profits.

Microsoft Gaming Earnings Hinge on Activision Blizzard

Analysts note that Microsoft and Xbox have relied heavily on Activision Blizzard to boost profits, which should come as no surprise considering the $69 billion price tag of the acquisition. Xbox content and services overall have shown a 62% increase in earnings, with 61 points being attributed to Activision Blizzard. Hardware revenue was down 31% with fewer consoles sold and, while not directly affected by the acquisition, does highlight how crucial Activision Blizzard has become for Microsoft's quarterly earnings. Now that Xbox has access to Activision Blizzard franchises, Microsoft is continuing to project similar fiscal quarters ahead. Xbox is expecting gaming growth to improve another 50 points, with a massive majority of that increase projected to come directly from Activision Blizzard.

In spite of legal hurdles, Microsoft and Xbox have already started reaping the benefits of the Activision Blizzard acquisition. That said, general audiences and industry professionals remain worried that the continued layoffs at Microsoft will have negative long-term impacts. Many have chastised Microsoft for boasting record profits while continuing to reduce its workforce, leaving some to question the necessity of the layoffs. With earnings expected to increase yet again next quarter, many are keeping a close eye on Activision Blizzard titles and Microsoft's decision-making.