“It was a breakthrough quarter for gaming” says Satya Nadella on Microsoft’s $1.3bn boost

The figures are in for Microsoft’s pandemic Q4, ending June 30th, and gaming saw a huge boost as the lockdown continued to affect many major economies. Gaming revenue increased by 64 per cent year-on-year, a boost of $1.3bn. That growth came largely from Xbox content and services, thanks to what Microsoft described as “record engagement.”

Amy Hood, Microsoft CFO, said results were “significantly ahead of expectations, with the continued benefit from play-at-home scenarios driving record levels of engagement and monetization across the platform, as well as a significant increase in console sales.”

Xbox hardware figures were up 49 per cent year-on-year, an incredible anomaly on the eve of a new console launch, as consumers rushed to buy consoles to keep them and their families entertained.

“It was a breakthrough quarter for gaming. We saw record engagement and monetization, led by strength on and off-console, as people everywhere turn to gaming to connect, socialize, and play with others,” said Microsoft CEO Satya Nadella.

Hood said there had been “with strong growth in third party transactions, GamePass subscribers, and Minecraft.” With Nadella also stating that Minecraft had “reached a new high of nearly 132 million monthly active users during the quarter.”

Looking forward Nadella talked on the company’s continuation of its Game Pass strategy. “This gaming TAM [Total Addressable Market] is much more expansive than what we’ve participated in, even with all of the success we’ve had with Xbox. We think, going forward, Xbox, with the approach we are taking, has much more of an ability to reach the 2+ billion gamers out there, and we’re in the early days of building that out.”

Hood noted that both incomes and outgoings were up. “Operating expense increased 10 percent… And operating income grew 15 percent and 19 percent in constant currency.” Showing that Microsoft was profiting from its increased investment in the sector.

Looking forward Nadella noted: “We have a new console that’s very much part of our strategy. But we go beyond the console to the PC. We go to mobile and we have the streaming service. So, all of these accrue to what we think, in the long run, is going to be a much bigger addressable market. And we have a great structural position. We have a social networking Xbox Live. Obviously, we have our store that monetizes super well, as well as we have the Game Pass subscription.”

All of which cues up Microsoft nicely for its extravaganza of first-party content that we’ll see later today.