Is The Xbox Dying—Or Is This Exactly What Microsoft Planned?

Let’s start with the body count: 70% collapse in November sales. Not a typo. While holiday shoppers flooded stores, Xbox Series X/S units flatlined. Nintendo’s Switch 2 moved 10.36 million consoles in six months. Sony’s PS5 sold 9.2 million. Xbox? A humiliating 1.7 million—so pathetic that the 2017 original Switch outsold it two-to-one.

This isn’t a slump; it’s a freefall. The broader console market shrank 27% in November, marking the worst holiday performance in twenty years. But Xbox’s 70% plunge? That’s not just the worst among competitors—it’s a statistical funeral.

Here’s your first clue this is intentional: Microsoft stopped reporting console sales in 2015. Think about that. When Apple struggles with iPhone sales, they still release numbers. When Tesla misses targets, they address it. But Xbox? Radio silence for a decade.

The company declined to comment on current figures when asked. Former executives aren’t so quiet. Laura Fryer, ex-Microsoft Game Studios chief, stated bluntly: “They seem to have no desire or literally can’t ship hardware anymore.” Mike Ybarra, former Xbox leadership, deleted a viral post calling the strategy “confusing” and warning of “death by a thousand needles.”

Why delete the truth? Perhaps because the truth is too revealing.

Phil Spencer, Microsoft Gaming CEO, admitted the quiet part out loud in 2023: “We’re not in the business of out-consoling Sony or out-consoling Nintendo. There isn’t really a great solution or win for us.”

Read that again. The captain of Team Xbox surrendered before the match ended. Satya Nadella, Microsoft’s CEO, doubled down recently: “It’s kind of funny people think about the console and PC as two different things. We built a console because we wanted to build a better PC.”

Translation: The next Xbox might not be a console at all. Sarah Bond, Xbox President, hinted it will borrow DNA from their new handhelds—essentially a gaming PC disguised as a living room box.

So the real question becomes: Is Xbox abandoning the console race, or has it already left?

In a move that would’ve been unthinkable five years ago, Bond declared exclusive games “antiquated.” Let that sink in. The very concept that built PlayStation, Nintendo, and Xbox fortunes is now obsolete—according to Xbox.

The proof? Halo—Microsoft’s Mario, its crown jewel—just got announced for PlayStation 5. Four other former Xbox exclusives fled to rival platforms in 2024. Spencer insists they won’t “put walls up” where fans want to play.

Why burn your own walled garden? Simple: The math no longer works. Selling games to 200 million console owners is peanuts when 2 billion gamers exist worldwide. Microsoft wants the other 1.8 billion, and exclusivity is the lock on the door.

This pivot is vicious. Microsoft axed 1,900 gaming employees in January, then sliced another 650 in September. Prestigious studios like Arkane Austin (Prey, Redfall) got shuttered overnight. Perfect Dark, in development for seven years, vanished. Unannounced projects died silently.

Bloomberg reported Microsoft demanded a jaw-dropping 30% profit margin from its gaming division—nearly triple the industry standard. The company denies the specific number, but the corpses of canceled games and laid-off workers tell another story.

Meanwhile, they’re squeezing the loyalists dry. Two price hikes in one year. The new ROG Xbox Ally X handheld costs an insane $999—more than most gaming PCs. It’s capitalism’s last gasp from a company that knows its hardware buyers are a shrinking cult.

While hardware burns, Game Pass is a rocket ship. 34 million subscribers. Nearly $5 billion in annual revenue. Cloud gaming hours up 45% year-over-year. Console streaming up 45% on Xbox hardware, 24% on other devices.

The service now reaches 30 countries after launching in India, home to 500 million gamers. They’re even testing a free, ad-supported tier to hook the console-less masses.

Spencer laid it out years ago: “As we think about reaching the over 2 billion people on the planet who play games, many of those people won’t be buying consoles and gaming PCs.”

The addressable market isn’t hardware buyers—it’s everyone. And Game Pass is the net.

Just as Microsoft exits stage left, Valve sprints center-stage. Their next-gen Steam Deck is everything Xbox should’ve been: a console-PC hybrid running 10,000+ games, launching at under $600.

The Verge’s headline was brutal: “Valve just built the Xbox that Microsoft is dreaming of.” Valve is executing the hardware-software fusion while Microsoft seems to be dismantling the concept entirely.

So who’s actually winning the future?

Here’s what insiders tell CNBC: Microsoft is designing an open ecosystem where players bounce between console, PC, and cloud seamlessly. The next device might run Windows, support Steam, Epic, and Xbox stores, and function as both TV console and full PC.

Think less “PlayStation killer” and more “Steam Deck for your living room.” It’s a Trojan horse for Microsoft’s real product: cloud services.

For a decade, gamers have written Xbox obituaries. This time, Microsoft is reading them aloud—while cashing Game Pass checks.

They’re not losing the console war; they’re forfeiting it to win the content war. While Sony and Nintendo battle over a shrinking island of hardware devotees, Microsoft is colonizing the cloud continent.

The Xbox you grew up with? It’s already dead. The question isn’t whether you’ll mourn it. It’s whether you’ll notice when the corpse stops moving.