Xbox Series X|S went from hope to defeat in just 4 years. Reports reveal that in the US it sells less than the commercially disastrous Xbox One, its global sales have dropped 42%, and Microsoft invites us to “play without a console”. So, we want to answer the question: what the heck happened with Xbox Series X|S and why did it fall apart?
Xbox Series sells less than Xbox One and global sales collapse. What happened?
The recent quarterly and annual financial report from Microsoft confirmed specialist projections regarding the decline in Xbox Series X|S sales. The hardware sector recorded a quarterly drop of 42% and an annual drop of 13%. The last time the duo saw a positive result was in the second quarter of the fiscal year from October to December 2023 with only a 3% growth. Then came the debacle: from January to March 2024, a 31% drop was reported. The current figure confirms that Xbox Series X|S is a commercial disaster.
Everything indicates that Xbox, as a console, has been relegated from the main narrative of Microsoft's top executives. Evidence of this is reported by The Verge journalist Tom Warren, who shared the exchange between a shareholder, Satya Nadella, and Amy Hood. As he points out, it's rare for partners to ask about Xbox, but this time they want to know what the heck is going on with the brand. Satya Nadella responded that the focus is on PC gaming and that cloud technology should carry the video game business to everyone. For her part, Amy Hood only talked about the potential of Xbox Game Pass, as well as annual subscriptions, services, and player spending on microtransactions.
A few weeks ago, renowned Circana analyst Mat Piscatella revealed that Xbox Series X|S sales in the US are 13% lower than those of Xbox One; both systems measured and compared after 43 months on the market. The European sales report courtesy of Gamesindustry.biz reports that hardware sales are declining for various reasons, but if there’s one console that’s getting hit hard, it’s the Xbox Series X|S duo.
Although the industry constantly changes, one principle remains: to sell your hardware or service well, you need top-notch software. In the case of Xbox Series X|S, in 4 years there hasn't been a title that has driven a crowd to need a Microsoft console. Halo Infinite fell very short; there’s no Gears of War; Forza has many users thanks to Game Pass but rarely stands out in sales; even the powerful Xbox Game Studios arm hasn’t managed to make a splash, with some good games that don't resonate in the market and others that pass without a trace despite high expectations.
Similarly, Xbox Series X|S is overshadowed by uncertainty and as a brand, there is damage. In an industry where everything is refined, processed, and sold like a fast-food chain, initial momentum is vital to making a good business. How can we forget that Xbox missed the best moment for Baldur’s Gate 3, GOTY 2023, because Larian had to deal with the Xbox Series S mess. At the same time, companies like Square Enix and Capcom have bypassed Xbox with some of their releases, whether for commercial reasons or technical issues, but the bottom line is: developers and publishers don’t want to release their games on Xbox.
A few days ago, the renowned Windows Central journalist Jez Corden opened the wound by pointing out one of Microsoft's big mistakes: failing to secure a deal with Hoyoverse to have games that are massive hits worldwide like Genshin Impact and Honkai: Star Rail. Millions of dollars flow through this path via PlayStation, PC, and mobile (hardware) while Xbox just watches.
"As Derek Strickland of TweakTown pointed out some time ago, Microsoft Gaming is doing everything it can to position Xbox as an ecosystem, but the public still associates it with consoles"
This has made Xbox Series into a consumer product that generates doubts instead of desire, and this is largely Microsoft's fault. The instability of its current era and constant strategy adjustments have not been well received by users, especially when attention is focused on services. We know everything revolves around Xbox Game Pass, but now more than ever, its console experience feels relegated and ultimately affects the brand. As Derek Strickland of TweakTown pointed out some time ago, Microsoft Gaming is doing everything it can to position Xbox as an ecosystem, but the public still associates it with consoles.
In this context, Microsoft has taken a step in a direction that displeases its fans but will be beneficial: play without a console, do it from your Smart TV or with a Fire Stick. For a reason, Satya Nadella boasted of 500 million active Xbox users, and today, every person playing Candy Crush anywhere in the world counts. Who cares if Halo sells or not, if the identity formed by Xbox over 2 decades is fading, what matters are the numbers and if they hit the mark, everyone is happy. That’s the reality and we’ll have to accept it, like it or not.
Xbox failed in winning over the public, lost ground, and has no presence where it should
At this point, it’s difficult, almost impossible, for Xbox to make a game-changing move that alters the commercial reality of its consoles. In fact, Microsoft expects nothing more than sales declines and its actions regarding Call of Duty are aimed at boosting Game Pass. After 4 years, Xbox Series X|S has no chance of standing out in the market, especially in the face of what its competitors are doing. PlayStation 5, despite its lack of exclusives, continues to sell and remains the leading console month after month. Nintendo is preparing the launch of Switch 2, and at least initially, it’s expected to be a phenomenon.
Simply put, Xbox has failed to win over the public for the second consecutive generation, and the details show it; just look at the preference for its direct competitor.
Let’s play a bit and imagine a group of high school or college students in a developed country where owning a console is an entertainment option, not a luxury. The conversation about video games leads to asking, “Where do you play Call of Duty, Fortnite, EA Sports FC, NBA 2K, Madden NFL, Grand Theft Auto?” It’s highly likely that the majority will respond “on PlayStation.” Sony’s report doesn’t lie, and these games we just mentioned are what keep PlayStation 5 alive, generating more than half of its revenue.
Which console will that player buy? Where will FOMO (fear of missing out) lead them? Not to Xbox, definitely.
Microsoft Gaming has failed to give relevance to its brand and present it as an attractive product this generation, and here’s a case in point: complaints from marketing staff acknowledging that PlayStation invests more in advertising, while they have to work wonders with what little they have.
"One of the big appreciation errors is thinking that everyone who buys a product does so in an analytical and deep way. With video games, it’s no different, and millions of players simply buy the most popular console..."
Xbox has lost significant positions that, though they may seem trivial and even ridiculous to the gaming community, work in the market. You don’t have to look far; just watch any show or documentary about what happens in the private lives of professional athletes in the US. What does LeBron James do in his free time? He plays Madden NFL, and where does he do it? On a PS5. The Lakers player even has a custom DualSense.
Recently, Euro 2024 had a minor scandal within the Italian football team. It was said that coach Luciano Spalletti banned PlayStation for the players because he didn’t want them wasting time. The reality is that there were rules, but no ban, and the same Italian coach revealed that they had a game room with PlayStation 5 consoles.
One of the big appreciation errors is thinking that everyone who buys a product does so in an analytical and deep way. With video games, it’s no different, and millions of players simply buy the most popular console, the one owned by celebrities, the one that gets mentioned everywhere. PS5 is everywhere, Xbox Series X|S is in a corner, and that’s because Microsoft decided so.
Despite the disaster, there’s something positive for Xbox console fans
Although the successful future some hoped for Xbox Series X|S didn’t arrive, we must highlight Microsoft’s commitment to hardware. Sony or Nintendo would have buried their systems if they didn’t meet expectations, but Xbox is different. This year, we’ll see 5 models on the market: Xbox Series X traditional, Xbox Series X All Digital, Xbox Series S traditional, Xbox Series S in Black Carbon, and Xbox Series S 1 TB; not bad.
Microsoft Gaming, according to Phil Spencer’s own statements, acknowledged that it was difficult to compete and practically impossible to match PlayStation and Nintendo in consoles, but they know there are still many gamers who will be encouraged to buy an Xbox Series X|S. Even against expectations, they maintain their support for physical media, something that is very costly these days according to Phil himself, but they don’t want to leave their users without options, and that, at the end of the day, is good, especially in the face of the onslaught of cloud and digital services that only temporarily provide entertainment in exchange for our money.
Xbox Series… you tried
The present of Xbox is one of contrasts; while console sales are plummeting, its gaming business in general and content and services in particular look thriving thanks to the acquisition of Activision Blizzard King. There’s no more to it; this is the new Xbox, closer to Call of Duty and Candy Crush than to Master Chief and Marcus Phoenix.
We can’t deny that the results are there, Microsoft is in the Top 5 of video game companies worldwide, but this has come at a cost: shedding those generations that grew up with the brand and built a solid identity proudly displaying an Xbox or Xbox 360 in their living rooms. Saying goodbye to those who trusted Xbox One and kept hope until Xbox Series. Today, they are just a niche that, at least, is still attended to but with no long-term perspective.
What do you think about Microsoft's situation and its Xbox consoles? Will you continue supporting the brand? Will you go all in with the services?
Let us know in the comments and stay with us at LEVEL UP.
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