Summary
Xbox has been losing ground in console sales to Nintendo and Sony for years, with a particularly sharp decline projected for 2025.
Sales of the Xbox Series S and Series X fell 70% year-over-year in November, the worst performance among major consoles.
In 2025, Xbox Series S/X sold around 1.7 million units, far behind:
Nintendo Switch 2: 10.36 million since its June launch.
PlayStation 5: 9.2 million units in the year.
Even the original Nintendo Switch (released in 2017) outsold Xbox in 2025. Microsoft stopped officially reporting console sales in 2015 due to the widening gap with PlayStation.
The console hardware sector is experiencing a severe downturn, with its worst November in two decades according to Circana data, but Xbox is the hardest hit.
Microsoft's gaming division has experienced a turbulent year:
Massive layoffs (more than 2,500 employees).
Closure of studios like Arkane Austin and Alpha Dog Games.
Cancellation of major projects such as "Perfect Dark" and "Everwild".
Price increases for consoles and services.
Former executives like Laura Fryer and Mike Ybarra have harshly criticized Xbox's hardware strategy, calling it confusing and unsustainable.
Despite all this, Microsoft doesn't consider "winning" the console war a priority:
Phil Spencer has stated that they aren't aiming to surpass Sony or Nintendo in hardware.
The vision is to reach anyone who wants to play, regardless of the device.
Microsoft is betting on a future based on:
Multiplatform (console, PC, mobile, TV, and cloud).
A more open system, where the next Xbox will be more like a PC.
Full integration between console, PC, and cloud gaming. Xbox Game Pass is the central pillar of the strategy:
34 million subscribers by 2024.
Nearly $5 billion in annual revenue.
More than 500 games in the Ultimate plan.
Cloud gaming usage grew 45% year-over-year, expanding to 30 countries, including India.
Microsoft is considering a free, ad-supported version of Xbox Cloud Gaming as an acquisition tool, although analysts doubt its profitability.
The company has invested heavily in content through acquisitions:
Bethesda ($8.1 billion).
Activision Blizzard ($75.4 billion).
However, the exclusivity strategy has changed:
Microsoft considers exclusives "outdated."
Games previously exclusive to Xbox, including "Halo," will come to PlayStation.
The goal is to "put games first" and bring them to more platforms. Xbox is also exploring new hardware formats:
Portable consoles developed with Asus.
Devices and accessories focused on cloud gaming, such as the Backbone Pro.
Pressure to increase profit margins has driven cuts, although Microsoft denies having imposed a 30% target.
In a market saturated with consoles and handhelds, Xbox is betting that the future of gaming will be in the cloud and without platform barriers.
The end result could be the end of the traditional Xbox as a console or a profound transformation toward a services ecosystem.