Xbox revenue soars while console sales drop, and Microsoft is pleased with Xbox games performance on PlayStation

Microsoft recently released its quarterly earnings, revealing that its gaming revenue is soaring and that Xbox games are doing fantastic on PlayStation.

According to Microsoft, gaming revenue was up a staggering 51% year-over-year to a record setting $5.45 billion. Unsurprisingly, its the new addition of Activision-Blizzard that Microsoft attributes this success too, saying that the company, which Microsoft finally acquired in October last year, made 55 points of net impact.

That’s not all because Xbox content and services also saw a massive boost of 62% thanks to a 61 point net boost from Activision-Blizzard.

While these dramatic boosts in numbers look amazing, they aren’t actually very surprising. These statistics are all being compared to the same time last when Activision-Blizzard did not fall under Microsoft’s umbrella, and thus all of that Call of Duty, World of Warcraft, Diablo and Overwatch money wasn’t counted. Activision-Blizzard is a huge company that sells millions and millions of games every game, so Microsoft’s acquisition of it was always going to result in a revenue spike. The only question was by exactly how much.

Microsoft CEO Satya Nadella highlighted the success of Diablo 4 coming to Game Pass, stating that people played over 10 million hours within the first ten days “making it one of our biggest first party Game Pass launches ever”.

We previously learned that Xbox does intend on also releasing the Call of Duty games on Game Pass. That includes new Call of Duty games launching straight onto the service as well. This will undoubtedly be a large part of why Microsoft expects growth in the mid-40s for Q4.

It was also confirmed that Q3 set records for game streaming hours, console usage and monthly active devices. However, Microsoft did not release any hard numbers, nor has it given any update on Game Pass subscribers numbers, a fact which continues to be very suspicious given how much Xbox has based its business plan on the service.

Overall, Activision-Blizzard’s impact was reported to amount to $1.97 billion. Microsoft bought the company for just under a mind-melting $69 billion. Nice.

During the earnings call, CEO Satya Nadella also took a moment to discuss the success Xbox games are having on PlayStation, pointing out that earlier this month Microsoft had 7 of its games on PlayStation’s top 25 games list.

 “Finally, we are expanding our games to new platforms, bringing four of our fan-favorite titles to Nintendo Switch and Sony PlayStation for the first time. In fact, earlier this month, we had seven games among the top 25 on the PlayStation store more than any other publisher.”

“We are committed to meeting players where they are by bringing great games to more people on more devices”, Nadella also said, continuing Microsoft’s slightly muddled messaging about their future plans in regards to more games going multiplatform.

It wasn’t all good news for Xbox though, as Microsoft also reported a significant 31% decline in hardware revenue. That’s the largest drop since the Series S launched. Typically the company has seen drops in the 7-13% range, although there was a 30% drop in January to March in 2023. Of course, hardware sales do decrease as the console gets older, but 31% is an unusually high dip.