Microsoft Gaming revenue has shown a significant rise, as stated in its latest Q1 2025 financial results alongside its cloud sector. This remarkable increase in its Gaming and cloud sectors is driven by the recent acquisition of Activision Blizzard and the strong performance of the Xbox Game Pass.
Revenue from Xbox content and services surged by 61% year-over-year, primarily due to a significant “net impact” from Activision’s acquisition, valued at $75.4 billion. Gaming as a whole grew 43%, although Xbox hardware revenue saw a notable decline of 29%, attributed to Microsoft’s ongoing efforts to expand gaming accessibility across multiple devices rather than focusing solely on Xbox consoles.
Microsoft raised the price of Xbox Game Pass Ultimate during the quarter and unveiled the new “Standard” tier for Xbox Game Pass. When popular games like Call of Duty: Modern Warfare III entered the subscription service, it broke previous records for both engagement and Game Pass memberships. Call of Duty: Black Ops 6, which debuted in October and isn’t yet included in these Q1 numbers, received praise by CEO Satya Nadella as the “biggest Call of Duty release ever,” which raised hopes for Game Pass subscriber growth in the next quarter.
Microsoft’s cloud business also showed resiliency, as evidenced by the 33% annual growth in Azure and other cloud services revenue, which was driven by increased demand for artificial intelligence (AI) services. Advances in AI integration, especially in productivity products like Microsoft Copilot, and a greater emphasis on cybersecurity helped the company’s Intelligent Cloud revenue reach $24.1 billion.
According to CFO Amy Hood, the slowdown in hardware sales may cause Xbox gaming revenue to decline slightly in Q2. The release of Black Ops 6 and Microsoft’s plan to expand access to well-known games across platforms have changed Xbox’s business model, although it is still anticipated that Xbox content and services income will stay consistent.
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