EXCLUSIVE: Microsoft, Activision Deny Report Regarding Financial Performance

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As a fervent admirer speaking on Wednesday, I came across a piece by The Information suggesting that Microsoft’s acquisition of Activision Blizzard hasn’t yielded the anticipated expansion for their Xbox business as initially envisioned up to this point.

The report, which requires a subscription to access, attributes the statement “Activision has been underperforming” regarding the company’s total earnings to portfolio manager Danny Fish. Upon contacting Activision and Microsoft for their response, representatives from both companies not only disputed The Information’s report as inaccurate and potentially misleading due to missing information, but also presented evidence demonstrating the company’s growth since its acquisition and the current status of Microsoft’s gaming sector.

In the past four financial reports, Microsoft has consistently shown growth in Xbox content and service revenues. Starting from Q2 FY2024, this revenue surge was largely fueled by the 55% net impact from the acquisition of Activision. For the subsequent quarter, the reported revenue increase was 62%, with 61% attributed to Activision. In Q4 2024, the growth continued at 61% due to a 58% net impact from the same purchase. Lastly, Q1 of FY2025 saw another 61% increase in revenue, with 53% coming directly from the Activision acquisition.

In simpler terms, about 85% or more of the income boost in each quarter can be attributed to Activision. Additionally, over the past three quarters, there’s been a gradual increase in revenue outside of Activision’s contribution, which has grown from just 1% to as much as 8% by Q1 FY2025.

Additionally, during Microsoft’s Q1 FY2025 earnings call in October, Satya Nadella, as CEO, hinted at the advantages of the acquisition, emphasizing its relevance to the ongoing growth in the gaming sector.

He stated that we reached unprecedented levels of monthly active users during the quarter, with an increasing number of game enthusiasts playing our titles not just on various devices but also on the Xbox platform. Furthermore, he emphasized that our company is strategically poised for sustained expansion in the long term.

As a gamer, I’ve got to say, Xbox Game Pass had an incredible day when Call of Duty: Black Ops 6 dropped! According to Nadella, it marked a new high for the number of fresh Game Pass subscriptions ever recorded on a single launch day. On top of that, he mentioned that this service also established a fresh quarterly record for overall revenue and average revenue per subscriber in Q1. That’s some impressive growth!

Regarding the assertion from the report stating that Microsoft’s CEO, Satya Nadella, indicated in 2021 that the company might abandon its gaming business entirely, this claim is firmly refuted. Instead, they cite remarks made around the same period where Nadella emphasized that Microsoft is fully committed to the gaming industry.

They concluded by noting that involvement on Xbox systems has reached a peak level. Microsoft reports that they have more than 500 million active users each month and over the past year, there has been steady growth in the number of monthly users on their cloud service.

Concerning The Information’s report suggesting that Azure servers and the Activision deal didn’t influence other studios to put their games on Game Pass, TopMob clarified that the report mistakenly combined a developer’s fear of potential profit loss with the fact that the business has the ability to pay developers upfront if they prefer that arrangement for their deals.

According to an insider from Activision, Microsoft has consistently communicated since day one that gaming will always be a top concern for them. Any other matters will be addressed later on, and it seems like some are exaggerating problems that simply don’t exist in the first place.

Microsoft is scheduled to announce its Q2 earnings for FY2025 on January 29.

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2025-01-16 23:48