The number of monthly active users (MAUs) is one of the factors that makes the Redmond company optimistic about the future.
During their fourth quarter financial report (Microsoft’s fiscal year starts in July…), CEO Satya Nadella said quite a lot about how well their gaming business is doing. For example, he said that it was a milestone for them to have 500 million monthly active users: “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 in our Showcase this quarter. 18 of them, including Call of Duty: Black Ops 6, will be available on Game Pass. Game Pass Ultimate subscribers can now stream games directly to devices they already own, including Amazon Fire TV, which launched last month,” Nadella said.
Of course, Activision Blizzard King’s IPs (Call of Duty, Diablo, World of Warcraft, Candy Crush) have gotten most of the attention, but Fallout should also be mentioned. Nadella says the IPs are reaching new audiences, and the first season of the Fallout series, which was shown on Amazon Prime Video, became the second most watched title on the platform, with five times as many people playing the Bethesda franchise during the quarter as a result. But there are problems: the $68.7 billion acquisition of Activision Blizzard King brings positives (Xbox content and services up +61% year over year, of which 58% brought to them by ABK, hardware results down: -42% in console sales).
How do Nadella and Microsoft CFO Amy Hood see the future of the gaming industry? “Our investment in games has basically been to have the right portfolio of both what we love about games and have always loved about games, which is Xbox and the content for the console, and to 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, which we never had.
We feel like we now have both the content and the ability to access all of the traditional major platforms where people play games, which is console, PC, and mobile. But we’re also excited about these new outlets, right? We extended XCloud to Amazon Fire TV. That’s the kind of new access that really helps us reach new players or the same players wherever they want to play. That will ultimately show up in that software plus services and transactional revenue for us, which is really our long-term KPI, and that’s what we’re building towards. That was the strategy behind Activision as an asset,” Nadella said.
“The real goal here is to be able to deliver a broad set of content to more users in more places, and really build what looks more like a software annuity and subscription business to us, with enhanced transactions and ownership of IP, which is quite valuable over the 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,” Hood added.
So the company is as happy as can be, but the hardware slump is a bit worrying…
