Who said one game cannot make a difference? Microsoft has reported a huge jump in revenue for Q1 2024 (running from July to September). The company said that it generated $3.92 billion from its gaming division. The revenue jump was mostly due to first-party content and Xbox Game Pass, according to gaming editor Derek Strickland—and Starfield was at the heart of it all.
In the first three months, the company generated a total revenue of $57 billion. The new Q1 figure is a record for the company and the highest for a non-holiday quarter. Overall, revenue from gaming jumped by 9% year-on-year.
Soon after its release, Starfield became the best-selling game in the US for the month of September. Bethesda claimed that 10 million players purchased the game or enjoyed it through Game Pass.
Also, revenue from Xbox Content and Services rose by 13% which was higher than the forecast. However, revenue from Xbox Hardware plunged by 7%. This was blamed on the lower number of console sales.
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Unlike Nintendo and Sony, Microsoft doesn’t announce the figures for their console sales in its quarterly earnings report. One of the biggest wins of the Xbox maker this year is arguably the closing of the $69 billion acquisition of Activision Blizzard earlier this month.
The deal means Microsoft now owns a plethora of game IPs including Call of Duty, Overwatch, Warcraft, Crash Bandicoot, Tony Hawk’s Pro Skater, Guitar Hero, Diablo, and so many others.
Starfield was the hero of Xbox Game Pass subscription jump
Microsoft disclosed that Starfield generated the highest single-day addition to Game Pass subscriber count in the history of the service. This was part of the details shared during the company’s Q1 earnings call.
“We released Starfield this quarter to broad acclaim,” said Satya Nadella, CEO of Microsoft during the call. “Over 11 million people have played the game to date. Nearly half of the hours played have been on PC. On launch day, we set a record for the most Game Pass subscriptions added on a single day ever.”
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It is important to note that in addition to paying the full $70 for the game, a good number of players paid for the pricier Deluxe Edition which gave them an early start to the game before it launched on Xbox Game Pass. The company said Starfield was primarily responsible for the 9% jump in its gaming revenue. See the rundown of the numbers below.
- Revenue: $56.6 billion (up 13% year-on-year)
- Operating income: $26.9 billion (up 25%)
- Net income: $22.3 billion (up 27%)
- More Personal Computing (incl. Xbox) revenue: $13.7 billion (up 3%)
- Xbox content and services revenue: up 13%
- Gaming revenue: up 9%
- Xbox hardware revenue: down 7%
Microsoft will be looking at Call of Duty: Modern Warfare 3 to pull a similar success as Starfield in the next quarter. The game is scheduled for release on November 10 and is one of the biggest releases for the month. Investors were also reminded during the earnings call that subsequently, Activision games will be classified as first-party revenue rather than third-party revenue.
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This reclassification will likely impact the company’s first-party and third-party revenues in the future. With the acquisition of Activision, Xbox now has 13 billion franchises, according to Microsoft. Inasmuch as gaming performed well (thanks to Starfield), the data from the earnings call shows that Microsoft as a business is largely driven by other segments.
The Intelligent Cloud pulled in $24.3 billion (up 19%) for the company while Productivity and Business Processes raked in $18.6 billion (up 13%).
Do you think a time will ever come when the Microsoft business is driven by the gaming division? Share your thoughts in the comment box below.
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