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The acquisition of Activision Blizzard by Microsoft was a significant move in the gaming industry. Despite the $68.7 billion deal, it was expected to bring more revenue with promises like Call of Duty on Game Pass. But the recent financial report has shown a twist.
In the fourth quarter of FY24, the company reported an operating loss of $570 million from the acquisition, even though the acquisition generated $1.68 billion in revenue.
The Promise of Call of Duty May Not Have Been Quite Enough
According to the earningspress release, for the fourth quarter of the fiscal year 2024, theActivisionmerger generated $1.68 billion in revenue forMicrosoft. However, the associated costs led to an operating loss of $570 million. This loss, combined with a $350 million loss from the previous quarter, brought the total impact to a staggering $920 million.
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Despite these losses, the company’s overall gaming revenue did see a notable increase in the earlier part of the fiscal year. For instance, in the second quarter of FY24, Xbox’s revenues were up 49% year-over-year, largely due to the integration. This increase was attributed to the popular titles likeCall of Duty, and the vast user base that Activision brought to the table.
LOL.The net impact from the Activision acquisition resulted in an operating loss of $0.57 billion for FY24 Q4. Despite generating revenue of $1.68 billion, the costs associated with the acquisition and integration exceeded the gross margin, leading to an operating loss.pic.twitter.com/CTgCaycmQM
The financial strain from the acquisition also led to significant workforce reductions. In January,the company announced layoffs of approximately 1,900 employeesfrom its gaming division, representing about 9% of its gaming workforce.
#Activisionstill isn’t profitable for#Xboxand has seen 3 quarters of heavy loss in a row, with acquisition integration, transaction and operating costs still negating marginsQ4 -$570mQ3 -$350mQ2 -$440mMakes for total ABK losses of $1.4 billion in just the last 3 quarterspic.twitter.com/0bkgiH3b7h
The benefits of the acquisition have not been uniformly distributed across the company’s gaming division. Console sales, for instance, have continued to decline, dropping 42% year-over-year in the fourth quarter. This has affected not just Microsoft, but also other major players like Sony and Nintendo.
Microsoft Expects More Growth in The Future From The Merger
Despite the short-term financial challenges, Microsoft remains optimistic about the long-term benefits of the acquisition. The company expects continued growth in its gaming revenue, driven by the expanded gaming portfolio and increased monthly active users.
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The company’s CEO Satya Nadella highlighted the record number of monthly active users across all platforms, attributing much of this growth to the inclusion of Activision’s popular titles,and upcoming ones likeBlack Ops 6.
Looking ahead, the company has laid out plans for its gaming division, including the release of major titles like Indiana Jones and the Great Circle and Avowed by Obsidian Entertainment.
And so, Microsoft’sActivision Blizzardacquisition has had a mixed impact on the company’s financials. While it has driven significant revenue growth in gaming, the high integration costs have resulted in operating losses.
What do you think of the company’s future? Let us know in the comments!
Daniel Royte
Gaming Writer
Articles Published :1370
As part of the FandomWire team, Daniel has followed the hero-shooter genre closely with a focus on titles like VALORANT, Apex Legends, and Marvel Rivals. You can also find him providing insight on the latest AAA titles from Elden Ring to GTA 6 and exploring the world of gacha games like Genshin Impact and Wuthering Waves. With more than 1,000 articles under his belt, you’ll need to look no further for a unique insight into every situation.If he’s not looking for the latest video game news, you’ll find him cheering on Ferrari in the race tracks of Formula 1 or at the theatres for the latest MCU releases.
