A "slew of layoffs, price hikes and studio closures" for Microsoft's Xbox "have led many to declare — not for the first time — that the Xbox is dead," reports CNBC. Or is it just changing its business model? The company's overall gaming revenue decreased 2% year-over-year, with a 29% dip in Xbox hardware sales, according to Microsoft's first-quarter earnings for fiscal 2026. The broader console industry has been in a major slump, with hardware spending down 27% year-over-year in November, which is typically a busy shopping month, according to a recent report from research firm Circana. It was the worst November in two decades, IGN reported, citing Circana data. Combined Switch and Switch 2 unit sales were down more than 10% during the month and PS5 sales were down more than 40%, IGN said. But the Xbox Series hardware took the biggest beating, with a dramatic 70% drop in sales...Microsoft's Xbox Series S and Series X, at 1.7 million units, couldn't outsell the original Nintendo Switch, which launched in 2017 and has sold 3.4 million units so far this year, data from game sales tracking site VGChartz estimated... Microsoft CEO Satya Nadella said in a recent interview with the TBPN podcast that the company's gaming business model will look to be "everywhere in every platform," from consoles to TV to mobile. His comments also hinted that the next Xbox may function more like a PC. "It's kind of funny people think about the console and PC as two different things," Nadella said. "We built a console because we wanted to build a better PC, which could then perform for gaming. So I kind of want to revisit some of that conventional wisdom...." A source familiar with Xbox strategy told CNBC that the company is looking at creating an open system that enables players to jump between console, PC and cloud gaming — and any form of entertainment beyond gaming. [Wedbush analyst Michael Pachter told CNBC] that while Microsoft is not completely abandoning hardware, the company is splitting its audience into existing buyers interested in specialized consoles and everyone else. Xbox Game Pass subscription service, which gives subscribers access to games from a variety of publishers, is a clear example of this strategy... The growth in cloud gaming has been blistering. Xbox reported a record 34 million Game Pass subscribers in 2024 and a total Game Pass revenue of almost $5 billion over the last fiscal year. Xbox said in a November blog post that the number of cloud gaming hours from Game Pass subscribers was up 45% compared to the same time last year. The Microsoft subsidiary also said console players are "spending 45% more time cloud streaming on console and 24% more on other devices..." Despite gaming's scaling limitations, Microsoft seems committed to doing what it has done with the rest of its products — moving it to the cloud... [Xbox President Sarah] Bond recently said in an interview with Mashable that the idea of exclusive games is "antiquated" as the company has leaned into cross-platform gaming... Xbox is betting that cloud and cross-platform gaming are the future. For a decade, claims have been made about the death of the Xbox, and what comes next could fully spell the end, or bring a metamorphosis.

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Microsoft's Xbox consoles were conspicuously absent from Black Friday's winners, failing to crack the top three in U.S. sales during one of the retail calendar's most important weeks. According to Circana analyst Mat Piscatella, the PlayStation 5 captured 47% of Black Friday week console sales ending November 29, followed by the Nintendo Switch 2 at 24% and -- somewhat remarkably -- the NEX Playground, a Kinect-like Android device aimed at children, at 14%. Microsoft ran no promotions on its consoles during the period. The Xbox Series X currently retails for $650 following this year's price increase, up from its $500 launch price in 2020. Sony, by contrast, discounted the PS5 by roughly 40% at some retailers. Piscatella noted on Bluesky that products without price promotions typically see no seasonal lift. Costco has removed Xbox consoles from its U.S. and UK websites.

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