Microsoft has released its financial summary for the final quarter of 2024, and while hardware sales are dire, the company is enjoying its highest gaming-related monthly active user count ever.
In a slideshow accompanying its earnings report, Microsoft says its gaming revenue grew 44% this quarter when compared to the same period last year, citing its monumental Activision Blizzard acquisition as one of the key reasons for this growth (which is an increasingly common refrain when it comes to Microsoft financials).
Additionally, the company says its “content and services revenue” grew by 61%, growth which Microsoft also attributes to the Activision Blizzard acquisition. It should come as no surprise that this acquisition has been so pivotal for Microsoft; it is, after all, the single biggest corporate purchase in gaming history, easily beating out Take-Two’s Zynga acquisition.
Microsoft also says it’s attracting 500 million monthly active users to its gaming services and devices, which is a record for the company, so it’s clear there’s still great interest in Xbox as a brand, which should hopefully cushion the blow when it comes to consoles.
Despite these healthy-looking numbers, Microsoft also says that hardware revenue has declined by 42%. Hardware decline is another familiar story for Microsoft, but 42% is a particularly precipitous drop, perhaps indicating that Microsoft won’t be staying in the console game for too much longer.
Indeed, a quick glance at the transcript of the earnings conference call that accompanies the financial report tells a similar story. In that call, Microsoft head Satya Nadella says the goal for Xbox is to offer “content for everywhere people play games”, and while he clarifies that means “starting with the PC”, he goes on to say he wants Xbox to “access all the traditional high scale platforms” on which people play games.
Microsoft CFO Amy Hood concurs; later in the call, she says Xbox’s goal is to “take a broad set of content to users in more places”, and that the aim is to build a “software annuity and subscription business” that emphasizes “enhanced transactions and the ownership of IP”, further reinforcing the idea that Xbox consoles are not long for this world.
Although console sales aren’t looking too hot, Microsoft’s general finances are looking pretty healthy. The company’s overall revenue is up 24% on a year-over-year basis, which makes the recent closure of studios like Tango and Arkane even more galling if you ask me.
As far as its future is concerned, Microsoft says it’s expecting further revenue growth throughout the 2025 fiscal year, but that hardware will likely continue to decline. You can check out Microsoft’s outlook for the first part of this financial year if you want to know what’s next.
