Microsoft gaming revenue up 43% year-on-year due to Activision acquisition

Microsoft's gaming revenue grew 43% year-on-year in Q1 of fiscal year 2025, largely due to the Activision acquisition. Xbox content and services revenue jumped 61%, while hardware sales fell 29%. Game Pass set a new Q1 record for total revenue and average revenue per subscriber. Despite strong overall performance, Microsoft expects gaming revenue to decline in Q2 due to hardware sales. The company is focusing on building long-term growth through higher-margin content and services, diversifying how players access their games.