Microsoft’s gaming income climbed considerably 12 months over 12 months, in accordance to its Q3 earnings report. However the huge soar in takings is misleading — most of it’s simply reflective of the addition of Activision Blizzard (and King!).

For the third quarter of fiscal 2024, Microsoft reported gaming income up 51% year-over-year, or $1.8 billion, to a complete of $5.45 billion. It is a file Q3 for the section, however it comes with a caveat. 55 factors of that internet affect had been from the Activision Blizzard acquisition, which means that Xbox content material and providers income not associated to Activision Blizzard was truly down 4% year-over-year. We noticed an analogous state of affairs final quarter, too, and can virtually actually see it once more within the subsequent two.

Xbox content material and providers income is in an analogous boat. It is up 62% year-over-year, however with 61 factors of internet affect from Activision Blizzard, which means it is solely up 1%. And {hardware} income, which wasn’t touched by the acquisition, is down 31% due to fewer consoles offered.

There are a variety of different nuggets in Microsoft’s 10-Q that spotlight how Activision Blizzard is impacting the gaming division and the corporate as a complete. Working bills, for example, had been up $1.3 billion or 41% year-over-year for the Extra Private Computing division (of which Gaming is a component) final quarter, 43 factors of which got here from the acquisition. And analysis and growth bills specifically are up – $669 million, to be exact. That is up 10% year-over-year for the Extra Private Computing final quarter, 9 factors of which had been from Activision Blizzard. Gross sales and advertising bills, too, had been up meaningfully from the acquisition, as had been basic and administrative bills.

It is costly to purchase one other huge firm, even past the $69 billion Microsoft paid for it within the first place. The actual worth of Activision Blizzard to Microsoft will in the end stay to be seen within the coming years, once we can take a look at gaming income in future quarters in contrast to this one, and see if Xbox was in a position to capitalize on its costly buy.

Replace 3:08pm PT: Within the earnings name right now, Xbox projected a really comparable quarter forward, with gaming gross sales progress within the low-to-mid 40s for This fall, with round 50 factors of internet affect from Activision Blizzard. Equally, Xbox content material and providers progress is anticipated to be within the excessive 50s, with round 60 factors of internet affect from Activision Blizzard. And {hardware} is as soon as once more anticipated to decline year-over-year.

Unique story continues: In the meantime, earlier right now, Blizzard introduced it might not be holding BlizzCon in 2024, a call that comes not lengthy after a sequence of Xbox-wide cost-cutting measures that led to the layoffs of 1,900 folks.

Rebekah Valentine is a senior reporter for IGN. Bought a narrative tip? Ship it to rvalentine@ign.com.