In all likelihood, Microsoft is about to be the proud new owner of a little game studio called Activision Blizzard — you might have heard of it. Microsoft has agreed to drop a whopping $68.7 billion to get its hands on the company. Certainly locking down future exclusives is a big motivation in the era of The Great Gaming Consolidation, but Activision Blizzard also makes a ton of money. The company’s 2021 financial results are in, and it made more money than ever. More than that, it earned a record $5.1 billion just from microtransactions, reports TweakTown. That’s a lot of horse armor.
The lingering COVID-19 pandemic has kept interest in gaming high, so it’s no surprise that revenues are up. Activision Blizzard pulled in a total of $8.8 billion with $3.6 billion in profit. You might be surprised how integral microtransactions are to the bottom line, though. The proportion of that revenue that came from so-called “in-game bookings” is $5.1 billion. Yes, most of Activision Blizzard’s revenue came not from selling games but from selling things in games. The company’s in-game revenue covers all sorts of add-on purchases. There are subscriptions like World of Warcraft and season passes for games like Call of Duty. Plus, many Activision Blizzard titles include stores where you can purchase cosmetics and other items.
With a robust selection of additional content, games can print money for months or years after their release, and Activision’s revenue from these transactions is only increasing. Last year, it made $4.85 billion on in-game content, and the year before that it was $4.2 billion. The overall revenue was “only” the second-highest ever, but the in-game revenue was the highest it has ever been. If you ever find yourself wondering why game publishers insist on cramming games full of paid upgrades, this is why. We’re really doing it to ourselves.
When you see numbers like this, Microsoft’s enormous purchase offer starts to make more sense. When added to Microsoft’s existing game revenue, Activision Blizzard will put it within striking distance of Sony, which currently earns almost twice as much revenue from its game properties. The deal is under scrutiny from the Federal Trade Commission, but most entertainment mergers are allowed to go through. Once complete, the deal would leave Electronic Arts as by far the largest independent game publisher in the west, but certainly not so large Sony or Microsoft couldn’t snap it up. China also has several large game studios, but those are likely safe from the console consolidation.