July 31st 2024.
Is the effort to release new Xbox Series X consoles a futile one? Microsoft's recent acquisition of Activision Blizzard has once again saved the company from a potential disaster, as their hardware sales have taken a significant hit.
It's no surprise, with all the talk of next-gen hardware and marketing strategies that downplay the console, that the Xbox Series X/S has not been performing well. In fact, it's been quite a flop.
These struggles are evident in Microsoft's latest financial report for the quarter ending on June 30, 2024. Hardware revenue has dropped a staggering 42% compared to the previous year. And this is not an isolated incident - in the previous quarter, sales had also dropped by 31% compared to the previous year.
What's even more disheartening is that this decline has occurred only four years after the launch of the Xbox Series X/S. To put it into perspective, the Nintendo Switch, which has been on the market for seven years, only saw a 12.6% drop in sales compared to the previous year in their latest financial report.
Fortunately, the acquisition of Activision Blizzard has somewhat masked these struggles for Microsoft. Revenue from Xbox content and services, including Game Pass, has gone up by a whopping 61% compared to the previous year. However, it's worth noting that Activision Blizzard contributed 58 points of net impact to this number. Without their contribution, the increase would have been a mere 3%.
The same can be said for gaming revenue, which went up by 44% overall. But once again, without the impact of Activision Blizzard (48 points), Microsoft's gaming revenue would have actually decreased by 4%.
While Microsoft did not disclose specific numbers for Game Pass subscribers, they did mention that they now have over 500 million monthly active users across platforms and devices, including Amazon Fire TV sticks.
In a statement, Microsoft CEO Satya Nadella highlighted their strong content pipeline and specifically mentioned the success of the Fallout TV show, which led to a significant increase in hours played for Fallout on Game Pass.
In addition, Microsoft also mentioned Call of Duty: Black Ops 6 as a reason for optimism. The highly anticipated game will be available on Game Pass on its launch date of October 25, 2024.
There's no doubt that Call of Duty: Black Ops 6 will be a major financial success, being one of the biggest franchises in the world. However, it's another example of how the acquisition of Activision Blizzard, which cost Microsoft a staggering $69 billion, is covering up for their shortcomings in other areas.
Earlier this month, Xbox announced that they will be increasing prices for all Game Pass tiers, effective September 12. They also have plans to release a new white, discless version of the Xbox Series X and a 2TB black version later this year.
However, it's unlikely that these new consoles will have a significant impact on hardware sales, especially as Microsoft continues to focus on their multi-platform strategy and tease their plans for the next generation.
In fact, just last month, Xbox boss Phil Spencer revealed that they are working on a handheld device, following the success of the Nintendo Switch and Steam Deck.
It's safe to say that Call of Duty: Black Ops 6 will keep Microsoft's financials going strong. Don't forget to email us, leave a comment, follow us on Twitter, and sign up for our newsletter for all the latest gaming content and releases.
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