During Microsoft’s Q4 2024 earnings call, CEO Satya Nadella talked quite a bit about gaming. He shared (quotes via Fool.com) a new milestone for monthly active users (MAUs) for games owned by Microsoft.
We now have over 500 million monthly active users across platforms and devices, and our content pipeline has never been stronger. We previewed a record 30 new titles at our showcase this quarter. 18 of them, such as Call of Duty, Black Ops 6 will be available on Game Pass. Game Pass Ultimate subscribers can now stream games directly on devices they already have, including as of last month, Amazon Fire TV.
Of course, a sizable portion of that userbase comes from Activision Blizzard’s prized IPs, like Call of Duty, Diablo, World of Warcraft, Candy Crush, et cetera. However, another franchise that earned a nod from the Microsoft CEO is Fallout, which received a massive boost after the release of the first season of the Amazon Prime Video show.
Finally, we are bringing our IP to new audiences. Fallout, for example, made its debut as a TV show on Amazon Prime this quarter. It was the second most watched title on the platform ever and hours played on Game Pass for the Fallout franchise increased nearly 5x quarter over quarter.
That’s not to say everything is peachy. While the $68.7 billion Activision Blizzard acquisition continues to pay dividends (Xbox content and services are up 61% year-over-year, but 58% of that increase is due to ABK), hardware sales continue to decline, with console hardware revenue down 42%.
In the Q&A portion of the earnings call, investors asked Microsoft CEO Satya Nadella and CFO Amy Hood about the outlook for gaming. Here’s what they had to say:
Satya Nadella: Our investment in gaming fundamentally was to have the right portfolio of both what we love about gaming and always have loved about gaming, which is Xbox, and the content for the console and expand from there so that we have content for everywhere people play games, starting with the PC. When I think about the Activision portfolio, it comes with great assets for us to cover both the PC and the console. And then, of course, assets to cover mobile sockets, which we never had.
We feel that now we have both the content and the ability to access all the traditional high-scale platforms where people play games, which is the console, PC, and mobile. But we’re also excited about these new sockets, right? We expanded XCloud to Amazon Fire TV. That’s the type of new access that really helps us a lot, reach new gamers or the same gamer everywhere they want to play. That ultimately will show up in that software plus services and transaction revenue for us, which is really our long-term KPI, and that’s what we’re building toward. That was the strategy behind Activision as an asset. Amy, if you want to add to it?
Amy Hood: The real goal here is to be able to take a broad set of content to more users in more places, and really build what looks more like to us, the software annuity and subscription business, with enhanced transactions and the ownership of IP, which is quite valuable long term. As Satya mentioned, things were with the ownership of IP, it can be monetized in multiple ways. And I think we’re really encouraged by some of the progress and how we’re making progress with Game Pass as well with some of the new announcements.
Game Pass just added several big games and is about to get even bigger, although it also became more expensive.
