Microsoft Executives Predict Gaming Growth from Advertising and Mobile Purchases
According to a recently leaked presentation, Microsoft executives anticipate significant growth in the gaming industry through advertising and mobile purchases in the coming years. The presentation, which was accidentally published on a court website, revealed the company’s projections for the future.
These insights have emerged amidst Microsoft’s ongoing legal battle with the Federal Trade Commission regarding its proposed acquisition of Activision Blizzard. Previous documents have shown Microsoft’s ambitious target of achieving $500 billion in total revenue by 2030 and its analysis of corporate clients’ usage of rival products.
A judge from the U.S. District Court for the Northern District of California issued an order stating that on September 7, the court requested redacted documents from all parties involved. Microsoft provided the documents on September 14, and they were uploaded to the court’s website. It was only later revealed that the documents contained non-public information, prompting their removal from public view. The judge then directed the parties to resubmit the documents, ensuring that they only contain public information.
The leaked presentation outlined Microsoft’s plans for a new Xbox console scheduled for release in 2028, following the Xbox Series X and Series S, which became available in 2020. While the presentation did not explicitly mention the $68.7 billion Activision deal, it is evident that Activision’s involvement is crucial for achieving the revenue targets outlined in the presentation.
The document predicts that gaming revenue will double to $36 billion in the 2030 fiscal year, compared to an estimated $18 billion for the 2022 fiscal year. According to an annual report, actual gaming revenue for fiscal 2022 amounted to $16.23 billion. These projections take into account the potential expansion of sales transactions across consoles and PCs, as well as an increase in Game Pass library subscribers, both of which are expected to contribute to Microsoft’s growth by 2030.
However, the presentation also highlights the potential for even more substantial growth in two emerging categories: advertising and mobile transactions. While Microsoft currently collaborates with Yahoo to sell display ads for Xbox consoles, these ads are not yet widespread. Activision Blizzard’s acquisition of King Digital Entertainment in 2016 provided revenue from in-app purchases and advertising, with the King subsidiary generating approximately $2.79 billion in revenue in 2022. Microsoft’s gaming CEO, Phil Spencer, referred to Activision as a “mobile first publisher” in a 2020 email included in the leaked documents.
The leaked presentation indicates that Microsoft expects advertising revenue to increase from around $100 million in fiscal 2022 to $1.4 billion in fiscal 2030. Additionally, revenue from mobile transactions is projected to reach $2.6 billion in fiscal 2030, compared to none in fiscal 2022. Combined, these two categories would contribute $4 billion, or 11% of total gaming revenue, by 2030.
Microsoft is currently working towards finalizing the Activision transaction by October 18. The United Kingdom’s Competition and Markets Authority is also reviewing a new proposal that involves divesting the cloud streaming rights to Activision games to Ubisoft.