tech

December 21, 2025

Xbox is losing the console race by miles. It's part of Microsoft's big gaming pivot

Sales of Microsoft's Xbox Series S and Series X are even behind the original Nintendo Switch, which launched in 2017.

Xbox is losing the console race by miles. It's part of Microsoft's big gaming pivot

TL;DR

  • Xbox has experienced a year of layoffs, price hikes, and studio closures, with some experts questioning its future.
  • Microsoft's gaming revenue decreased 2% year-over-year, and Xbox hardware sales dropped 29%.
  • The broader console industry is in a slump, with significant year-over-year declines in hardware spending.
  • Xbox Series hardware sales saw a dramatic 70% drop, trailing behind Nintendo Switch and PlayStation 5 sales.
  • Microsoft is shifting its focus from competing with Sony and Nintendo on console sales to expanding gaming access across PC, console, and handheld devices.
  • The company aims to create an all-encompassing entertainment hub and serve a wider market, as indicated by CEO Satya Nadella's vision for gaming to be 'everywhere in every platform'.
  • Future Xbox consoles may function more like PCs, with an open system enabling seamless transitions between console, PC, and cloud gaming.
  • Xbox Game Pass subscription service is a key part of this strategy, with a growing subscriber base and expanding content offerings.
  • Cloud gaming hours from Game Pass subscribers are increasing, with expansion into new markets like India.
  • Microsoft has made significant acquisitions in the gaming industry, including ZeniMax Media and Activision Blizzard, to bolster its content library for cloud services.
  • The company is moving away from a strict exclusive titles strategy, with some former exclusives now available on competing consoles.
  • Recent layoffs have impacted nearly 10% of Microsoft's gaming division, with studio closures and shelved projects.
  • Microsoft has increased prices on its consoles, similar to competitors Nintendo and Sony.
  • Xbox is betting on cloud and cross-platform gaming as the future, potentially signaling a metamorphosis rather than an end.

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