While Xbox announced its first 2025 conference with the detailed presentation of three games and a surprise, the brand is also expected at the end of January for the presentation of its latest financial results. But we already know one of the first lessons that we can draw from it, and that risks raising a big problem.
Xbox revenue expected to be down again
It is on January 29 that Microsoft will present the figures of its latest financial results to investors. As usual, we will also be entitled to overall figures on the performance of the Gaming branch, and Microsoft is not very optimistic. We are talking here about the revenues of Microsoft’s second fiscal quarter, that is to say the last quarter of an annual calendar, which runs from October to December.
Regarding video games, we expect a decline in revenue due to hardware. We expect revenue growth for Xbox content and services to be relatively stable.
In summary, Xbox Series On a comparable basis, that is to say excluding Activision from the equation, gaming revenues at Microsoft were already down in the last quarter.
Usually, revenues for the second fiscal quarter are among the strongest of the year for all publishers and manufacturers, largely boosted by Christmas sales and the release of big titles. But according to Microsoft’s estimates, these will be down compared to last year, and that’s a big problem.
Despite Xbox Game Pass and more widely distributed big games, Xbox is stagnating
There are several data to take into account when analyzing Xbox performance for the last three months of 2024.
- Previous quarters were compared to a period when Activision was not yet integrated into the brand’s revenues, and showed double-digit revenue increases. Microsoft officially validated the acquisition of Activision Blizzard King on October 13, 2024, this means that it will be the first time since the acquisition that we will have an Xbox turnover truly comparable to the previous year.
- According to Activision, Call of Duty Black Ops 6 has officially broken attendance records, including the highest number of players over 3 days. Here we compare this launch with that of Modern Warfare III last year, which was mixed due to an obvious lack of content. Black Ops 6 logically greatly outperformed Modern Warfare III.
- Last year, the last Xbox quarter was marked by the releases of Call of Duty Modern Warfare 3 and Forza Motorsport. This year, it’s Black Ops 6, STALKER 2, Microsoft Flight Simulator 2024 and Indiana Jones that we’re noting.
If Xbox games released between October and December seem more important in 2024 than in 2023, how is it possible that revenues generated from sales of Xbox games and services are stable?
If Xbox can’t generate more revenue with larger titles and with some of its games now generating revenue on PlayStation and Nintendo Switch (such as Sea of Thieves), that’s a big problem.
The only big difference compared to last year, beyond the quality of the games released, is that this is the first time this year that a Call of Duty game is available upon its release on Xbox Game Pass. Given Microsoft’s pessimism about its numbers, this means that Black Ops 6 almost certainly generated less revenue than Modern Warfare 3 last year, even though it wasn’t a huge success.
This certainly means that Game Pass subscription revenues cannot compensate for the sales that Black Ops 6 should have made on Xbox, even if it should be remembered that Microsoft is betting on medium/long term revenues with Game Pass, and that Black Ops 6’s value in the service doesn’t stop at just these three months of the year.
Even so, the equation seems quite complicated for Xbox in any case. Not only are console sales declining, but revenue from the sale of games and services such as Game Pass is stagnating. And all this even though the brand’s games have never been broadcast on as many different platforms as today. Xbox strategy has changed a lot in recent years, the months and years that follow are sure to be exciting to study.
