Call of Duty and Diablo boost Microsoft's gaming revenues, but Xbox sales continue to fall

gamesindustry.biz:

Microsoft has released its latest financial results, showing significant growth in gaming revenues — thanks in no small part to the acquisition of Activision Blizzard.

However, Xbox hardware sales continue to decline and saw the steepest drop since the Xbox Series X and S launched in 2020, down 31% year-on-year.

The company's overall revenues were up 17% to $61.9 billion, primarily due to growth in Microsoft Cloud which saw revenues rise 23% to $35.1 billion.

Here's what you need to know:

For the three months ended March 31, 2024

Microsoft attributed the 51% growth in games revenue to the better than expected performance of Activision Blizzard titles, particularly the continued success of Call of Duty: Modern Warfare 3.

Another Activision highlight was the introduction of Diablo 4 to Xbox Game Pass, which was played for ten million hours within the first ten days of being on the service, making it one of the biggest first-party launches since the subscription service began.

However, revenue from Xbox console sales fell by 31% year-on-year in the three-month period — the steepest decline since the current generation devices launched. Of the past eight quarters, six have seen declines in Xbox hardware revenue.

Declines have mostly ranged between 7% and 13%, although there was a 30% decline in the company's Q3 (January to March) 2023.

The platform holder also reported new Q3 records for game streaming hours, console usage and monthly active devices, although it did not release any figures.

During the accompanying earnings call, CEO Satya Nadella also pointed to the benefits of releasing more Microsoft-owned titles on other platforms, such as PlayStation 5 and Nintendo Switch. In fact, he told investors that Microsoft had seven games among the top 25 on the PlayStation Store earlier this month — more than any other publisher at the time.

While the company is reaping the benefits of acquiring Activision, it is also still dealing with the costs. The addition of the Call of Duty