Microsoft + Activision Blizzard: Show Me the Money! (Premium)

Like many, I'm curious how Activision Blizzard will impact Microsoft's financial results going forward. And so I did some math. And then some outright guessing. And then some more math.

More to the point, I looked at the company's quarterly revenues for the past four sequential quarters and then compared them to Microsoft's results in the same time period. And then to those of PlayStation and Nintendo. And other gaming firms. And the broader games market.

Down the rabbit hole we go.

Note: Since starting this write-up, Activision Blizzard released a new quarterly earnings report, for the calendar quarter (CQ) 2023-02. But because Microsoft won't release its own results for this quarter until next week, I do not include that in this discussion. --Paul
Compared to More Personal Computing
First, let's look at how Activision Blizzard would have impacted Microsoft's More Personal Computing business unit, as this is the business unit responsible for Xbox. This is about as granular as we can get, because Microsoft does not call out Xbox earnings separately, let alone individual Xbox products and services.

More Personal Computing delivered revenues of $14.4 billion, $13.3 billion, $14.2 billion, and $13.3 billion, respectively, over the previous four quarters sequentially. And so with revenues of $1.64 billion, $1.78 billion, $2.33 billion, and $2.38 billion, respectively, over the same period, Activision Blizzard would have raised this business unit's revenues to $16.04 billion, $15.08 billion, $16.53 billion, and $15.68 billion, respectively, or by an average of 12.83 percent.

More Personal Computing is the smallest of Microsoft's three top-level business units, and this change would have improved its standing against the other two businesses. But in only one quarter, calendar quarter 2022-04, the holiday quarter, the addition of Activision Blizzard would have been enough to land More Personal Computing in second place, but just barely, ahead of Productivity and Business Processes.
Compared to Microsoft overall
Compared to Microsoft overall, Activision Blizzard doesn't even rate as being in the same general industry. With revenues of $51.9 billion, $50.1 billion, $52.7 billion, and $52.9 billion in the previous four quarters sequentially, Microsoft's average revenues during this time period were $51.9 billion. Activision Blizzard's? Just $2 billion. And so the addition of Activision Blizzard to Microsoft would have improved the latter's revenues over this time period by an average of just 3.85 percent.
Compared to the other console makers
Some people see Microsoft's Activision Blizzard acquisition as the software giant buying its way out of last place in the console market. I don't---it is, instead, an attempt to better its position in gaming overall, especially in mobile where Xbox has no position---but I do see the value of comparing Activision Blizzard with Xbox and its game console competitors, PlayStation (which is part ...