Microsoft has reported their results for Q3 2024 (which ran from the beginning of January to the end of March of this year) and it throws into very stark relief two narratives unfolding for Team Green. On the one hand, Microsoft Gaming revenue is up significantly overall following the purchase of Activision Blizzard, but the rest of the Xbox business has continued to suffer with console sales down badly year-on-year.
Overall Microsoft Gaming revenue increased 51 percent compared to Q3 2023, but 55 percent of that increase game from Acti-Blizz. In other words, gaming would actually be down 4 percent without all that delicious Call of Duty revenue now pouring in. Overall Xbox content and services revenue was up 62 percent, with 61 of those points coming from Activision.
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Meanwhile, sales of the Xbox Series X/S was down 31 percent year-on-year, with Microsoft expecting further declines next quarter. It should be noted that Xbox sales have been sliding for some time now – in fact they dropped 30 percent in Q3 of last year too. One has to go back to early-to-mid 2022 to see any real growth in Xbox sales. This would seem to be consistent with recent reports from retailers that Xbox sales are “flatlining” to the point some publishers are questioning the work and expense required to port games to the Xbox Series X/S.
I’ve said it before, but it seems like Microsoft is at a crossroads when it comes to gaming. On the one hand, they’re now one of the biggest and potentially most lucrative third-party publishers around, on the other, they still have this first-party Xbox business that seems like it’s running on fumes. Microsoft has already started bringing some former exclusives to other platforms, and I suspect there’s more to come. Microsoft always follows the money and for them third-party is now where the money is.
During Microsoft’s Q3 earnings call, CEO
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