As Xbox sales plunge, Activision's acquisition comes to Microsoft's rescue

When Microsoft acquired Activision Blizzard for $69 billion, many questions were raised about the financial implications of the deal. But as it turns out, revenue from Activision Blizzard is compensating for the fall in Xbox console sales, which has taken the biggest hit since 2020!

Figures released by Microsoft show Xbox sales dropping by 31% in Q3 2024. On the other hand, the revenue from Xbox content and services increased by 62%, with Activision Blizzard contributing a large part of it. According to Microsoft, the net impact of Activision Blizzard’s acquisition was 61 points!

Microsoft’s overall revenue increased to $61.9 billion, up by 17%, with Microsoft Cloud alone adding $35.1 billion, 23% higher than last year.

This quarter’s numbers look promising to Microsoft for another reason: Windows OEM revenue increased by 11%. Microsoft had previously stated that these numbers would be in line with the previous year’s figures. An increase here can be attributed to Microsoft’s investment in Artificial Intelligence and its plans to integrate AI into Windows.

Microsoft’s CEO Satya Nadella earlier said,

Microsoft Copilot and Copilot stack are orchestrating a new era of AI transformation, driving better business outcomes across every role and industry.

However, the nosediving Xbox sales remain a concern for Microsoft. There are reports of retailers cutting back Xbox stocks in Europe as gamers prioritize PlayStation and PC. And the future doesn’t look too promising either.

However, Microsoft has repeatedly denied any plans to discontinue its flagship Xbox console. Instead, it’s going with the tried and tested method, i.e., integrating AI into the Xbox console, given the success with Windows. As to whether it helps Xbox reclaim its lost position in the market, only time will tell!

What factors would you attribute to the fall in Xbox sales? Share with our readers in the comments section.