Microsoft published its financial report for the first quarter of fiscal year 2025. The report revealed that software-based gaming revenues have increased significantly, but Xbox hardware revenues continue to decline.
The company stated that Xbox content and service revenues increased by 61 percent compared to the same quarter of the previous year. It was emphasized that this increase had a “53-point” contribution, which was the net effect of the Activision acquisition. By contrast, hardware revenues fell 29 percent this quarter. Microsoft’s strategy of offering its games to a wider platform rather than limiting them only to Xbox consoles may have been effective in this decline.
During this quarter, Microsoft introduced the new Xbox Game Pass “Standard” membership level and an increase in the Xbox Game Pass Ultimate subscription price. Additionally, the inclusion of Call of Duty: Modern Warfare III in Xbox Game Pass was a notable development during this period. However, the release of Call of Duty: Black Ops 6 was not included in this quarter. Microsoft CEO Satya Nadella said in a statement that Black Ops 6 is the “biggest Call of Duty launch ever.”
Microsoft also has a strong performance in cloud revenues
Microsoft’s Intelligent Cloud division generated $24.1 billion in revenue, with annual growth of 20 percent. A 33 percent increase in Azure and other cloud services contributed significantly to this growth; Demand for artificial intelligence (AI) services in particular supported growth. The Productivity and Business Processes division, which includes Office products, also achieved revenue of $28.3 billion, an increase of 12 percent.
Microsoft’s OEM and Devices revenues increased by 2 percent. This growth was driven by increased Windows OEM revenues, but the decline in Device revenues partially offset this increase.
Microsoft, like many companies today, is making serious investments in artificial intelligence-focused features and tools. The company uses its AI-based tools specifically to improve the Copilot system. “AI-powered transformation is reshaping business processes, tasks and workflows in every role, function and business process,” Nadella explained. With this transformation, the company aims to expand its growth opportunities by reaching new customers. Nadella also stated that the AI business unit will surpass $10 billion in annual revenue this quarter.
Considering security among the top priorities, Microsoft published a report on its security efforts in the past period. However, the company also had to deal with the effects of “Blue Screen” errors caused by a large-scale outage on the CrowdStrike platform.