Microsoft predicts rapid gaming growth driven by ads and mobile transactions

Microsoft








executives in 2022 predicted that gaming growth would be driven by advertising and mobile purchases in the coming years, according to recently published documents found inadvertently on a court website.

The disclosure, found in a Microsoft presentation from May 2022, provides further insight into the ongoing battle between Microsoft and the Federal Trade Commission over the pending acquisition of Activision Blizzard. Previous documents have revealed Microsoft’s revenue target of $500 billion by the fiscal year 2030 and its analysis of its corporate clients’ use of rival products.

In July, federal Judge Jacqueline Scott Corley ruled in favor of Microsoft and Activision. Since then, the court has been granting requests for redactions to protect nonpublic information.

According to a court order, Microsoft sent a link to documents containing the May 2022 presentation to the court on September 14. However, after realizing that the documents contained nonpublic information, they were removed from public view.

The presentation outlines plans for a new Xbox console set to release in 2028, following the Xbox Series X and Series S released in 2020. Updated versions of the Series X and Series S, along with an updated controller, are also planned for 2024.

The presentation does not mention the $68.7 billion Activision deal, which had been announced earlier. However, Activision is expected to play a significant role in achieving the revenue goals outlined in the presentation.

The document predicts gaming revenue to double to $36 billion by the fiscal year 2030, compared to a forecast of $18 billion for fiscal year 2022. The actual gaming revenue for fiscal year 2022 was $16.23 billion, according to an annual report.

Phil Spencer, Microsoft’s gaming CEO, expressed his disappointment with the public disclosure of the company’s plans in a post on X (formerly known as Twitter).

A Microsoft spokesperson did not respond immediately to a request for comment.

The completion of the Activision deal would lead to Microsoft expanding sales of transactions across consoles and PCs, as well as potentially attracting more subscribers to its Game Pass library. The forecast for fiscal year 2030 incorporates growth in these categories.

However, the company envisions even faster growth in advertising and mobile transactions, two emerging categories. Microsoft currently collaborates with Yahoo for selling display ads on Xbox consoles, but these ads are not yet widespread.

Activision Blizzard acquired King Digital Entertainment, the company behind the popular Candy Crush franchise of mobile games, in 2016. This acquisition allowed Activision Blizzard to generate revenue through in-app purchases and advertising. In 2022, the King subsidiary contributed approximately $2.79 billion in revenue, an 8% increase from the previous year.

“Activision is truly a mobile-first publisher,” stated Spencer in a 2020 email included in the new document cache.

The 2022 presentation reveals that Microsoft anticipates its advertising revenue to grow to $1.4 billion by fiscal year 2030, up from approximately $100 million in fiscal year 2022. It also projects revenue from mobile transactions to reach $2.6 billion, compared to zero revenue in fiscal year 2022. The combined total for advertising and mobile transactions is $4 billion, accounting for 11% of total gaming revenue.

Microsoft aims to finalize the Activision transaction by October 18. The Competition and Markets Authority in the United Kingdom is evaluating a new proposal that involves transferring the cloud streaming rights to Activision games to Ubisoft.

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