Xbox console sales continue to nosedive as Activision boosts earnings

Microsoft’s acquisition of Activision Blizzard continues to save Xbox from disaster, as the company records another significant drop in hardware sales.

If it wasn’t clear already, from the talk of next generation hardware and marketing beats downplaying the console, the Xbox Series X/S has been a significant flop.

The console’s decline is on display in Microsoft’s latest financial report, for the quarter ending June 30, 2024, which saw hardware revenue drop 42% year-over-year. This follows the company’s previous quarterly results where sales dropped 31% over last year.

These results are especially bleak considering it’s only been four years since the Xbox Series X/S launched. For context, sales of the Nintendo Switch, seven years into its lifecycle, recorded a drop of only 12.6% year-over-year in Nintendo’s latest financial report.

Elsewhere in Microsoft’s financials, the acquisition of Activision Blizzard has helped to paper over the cracks. Xbox content and services revenue, which includes Game Pass, was up by 61% over the previous year, but Activision Blizzard contributed 58 points of net impact to this number, so it only went up by 3% if you remove that from the equation.

It’s a similar picture in terms of gaming revenue, which went up by 44% overall. Without the acquisition of Activision Blizzard however, which contributed 48 points of net impact, Microsoft gaming revenue would have been down 4%.

While Microsoft didn’t reveal specifics in terms of Game Pass subscriber numbers, it did highlight a statistic around monthly active users across platforms – which now includes Amazon Fire TV sticks.

Microsoft CEO Satya Nadella, said: ‘We now have over 500 million monthly active users across platforms and devices. Our content pipeline has never been stronger.’

Along with highlighting the Fallout TV show, which apparently caused hours played for Fallout on Game Pass to increase ‘nearly five times’, Microsoft specifically mentioned Call Of Duty: Black Ops 6 as a reason for optimism, which will launch on the subscription service day one on October 25, 2024.

Call Of Duty: Black Ops 6 will undoubtedly be a significant boon in terms of financials, as one of the biggest franchise’s on the planet, but it’s another case where the acquisition of Activision Blizzard – which cost Microsoft $69 billion – is propping up shortcomings elsewhere.

Earlier this month, Xbox announced plans to increase prices across all Game Pass tiers, which will come into effect from September 12. Microsoft is also launching a new white, discless version of the Xbox Series X, alongside a 2TB black version, later this year.

It’s unlikely that these new consoles will have any significant impact on hardware sales numbers though, especially as Microsoft continues to push its multi-platform strategy and tease its next generation plans.