Xbox’s position in the console market keeps getting weaker, and it’s becoming harder to ignore. Hardware sales are falling fast, layoffs and studio closures have piled up, and Microsoft’s gaming division looks increasingly unstable. While the entire console industry is struggling, Xbox is clearly taking the biggest hit, with hardware sales reportedly down around 30% year over year and a massive collapse in monthly sales compared to PlayStation and Nintendo.
Nintendo’s Switch 2 and Sony’s PlayStation 5 continue to outsell Xbox by a wide margin, while Microsoft has quietly stopped reporting console unit sales altogether. Former Xbox executives have publicly criticized the brand’s direction, calling its strategy confusing and questioning whether Microsoft even wants to make consoles anymore. That criticism doesn’t seem unfair when price hikes, canceled games, and shuttered studios keep making headlines.
Instead of fighting Sony and Nintendo head-on, Microsoft appears to be stepping away from the traditional console war. Xbox leadership has openly said it’s not trying to “out-console” anyone. The next Xbox is rumored to look more like a PC, designed to let players jump between console, PC, cloud gaming, mobile, and smart TVs. In other words, Xbox wants to be everywhere—except maybe on your TV as a must-have console.
This shift explains why exclusives are no longer a priority. Once-iconic Xbox franchises, including Halo, are now heading to PlayStation. Microsoft has called exclusivity “antiquated,” signaling that selling subscriptions matters more than selling consoles. Xbox Game Pass supports that goal, with tens of millions of subscribers and billions in revenue, while cloud gaming usage continues to grow despite serious cost and scaling challenges.
At this point, Xbox isn’t really trying to win the console war—it’s trying to change the rules. Whether that’s a smart evolution or a slow retreat from hardware remains the big question. For now, Xbox feels less like a clear competitor and more like a brand still figuring out what it wants to be.
