Summary
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Microsoft has refuted a recent report that claimed the Activision Blizzard acquisition did not have a significant impact on Xbox Game Pass or its overall gaming business.
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The company pointed to the fact that it reports growth in revenue from Xbox content and services from Q2 2024 as evidence that contradicts that report.
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New performance details about Microsoft's gaming division are expected to arrive as part of its next financial report, which is scheduled for January 29.
Microsoft pushed back against a recent report that its acquisition of Activision Blizzard did not have a material impact on Xbox Game Pass or its overall gaming business. And while the Xbox maker has provided some evidence to support that claim, actual performance figures for its gaming division aren't expected to arrive until late January 2025.
Microsoft completed its acquisition of Activision Blizzard King in October 2023. The $68.7 billion purchase marked the largest transaction of its kind ever completed not only in the gaming space, but in the entire technology industry. A report by The Information 15 months later claimed that the impact of the acquisition had fallen short of internal expectations. Denny Fish, a portfolio manager overseeing approximately $800 million worth of Microsoft stock, was quoted by the media as calling Activision's post-acquisition performance “disappointing”. The report suggested that the ABK deal did little to boost Xbox Game Pass growth and had little impact on Microsoft's gaming division overall.
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Microsoft subsequently pushed back against the claims, with a company representative telling Insider Gaming that The Information's report lacked context. Elaborating on this point, the spokesperson highlighted that Microsoft reports growth in revenue from Xbox content and services from Q2 2024 and cited this as evidence of the acquisition's success. Over the past nine months, the segment's revenue grew 61%, with 55 of those points directly attributable to the impact of the Activision Blizzard acquisition, the representative said.
Activision Blizzard identified as the driving force behind Microsoft's recent gaming growth
The company also rejected suggestions that the $68.7 billion deal was not beneficial to its subscription service. Evidence of this was made public as early as October 2024, when Microsoft CEO Satya Nadella said that Black Ops 6 set record for number of Xbox Game Pass subscribers on launch day, in addition to being “biggest” Call of Duty issue in history. Activision Blizzard is also said to account for 85% of Microsoft's gaming division's quarterly revenue growth from Q2 2024.
Microsoft says it never considered ending its gaming business
A report by The Information also suggested that Microsoft was recently considering exiting the gaming industry and claimed that Nadella said something along those lines in 2021. A company representative directly denied this in a statement to Insider Gaming. And while Xbox hardware revenue has been in long-term decline, Microsoft says user engagement across its gaming platforms is currently at an all-time high.
Actual details regarding the performance of the tech giant's gaming division are expected to arrive on January 29. That's the date Microsoft is scheduled to report its consolidated financial report for the second quarter of fiscal 2025, which covers the three-month period ending Dec. 31, 2024.
Xbox Game Pass Ultimate
Xbox Game Pass Ultimate is the top tier of Microsoft's flagship gaming subscription service, offering more than 100 game titles to play with a single purchase, making it one of the most compelling value propositions in the Xbox ecosystem to date.
