As Xbox console sales collapse, Microsoft bets big on Game Pass, Cloud, and multiplatform releases
2025 has been a pretty rough year for Microsoft and its Xbox gaming division, especially in the UK, where console sales reportedly decreased by 39% compared to 2024.
Christopher Dring from The Game Business shed light on Xbox hardware sales. The reported console sales drop is staggering, a 39% drop compared to the previous year, making it the worst year in Xbox’s sales history.
The sharp decline is much more apparent than Sony’s PlayStation 5, which saw a slight decrease of around 12% in the UK. It just goes to show that while the gaming industry as a whole is facing a few headwinds, Xbox seems to be shouldering the brunt of it.
However, that’s far from the end of the story. Over in the U.S., things seem worse for Microsoft’s gaming division, as data from Circana revealed that Xbox console sales decreased by 70% year-over-year in November 2025. Many industry experts have called November 2025 the worst November for video game console sales since 1995.
PlayStation also saw a sharp dip in sales that month too, with a 40% decrease in sales in the same period, but Xbox’s decrease is much more drastic.
It’s not without reason to say that Xbox experienced a significant shake-up in 2025. The company laid off thousands of employees across its gaming division and cancelled highly anticipated projects.
Despite this, Microsoft isn’t throwing in the towel, as the company has shifted its focus to subscription service Xbox Game Pass and is bringing its first-party titles to more platforms, a move Sony is evenmimicking by slowly releasing its in-house projects on Xbox and PlayStation PC.
Xbox Cloud is becoming a focus for bringing AAA gaming on the go, across smartphones, PCs, low-powered notebooks, and even automobiles with supported operating systems. It’s been clear for a while that profit margins on console or hardware sales have been pretty thin, so this move does make sense. However, it’s a pretty hard pill to swallow for gamers who have completely immersed themselves in the Xbox ecosystem.
Still, Microsoft doesn’t seem phased about recent developments. The company’s president of game and content studios, Matt Booty, recently said that Xbox will host a Developer Direct Stream in the next month. He said, “We’ve got more stuff coming up than we can fit in one show.”
Irrespective, Xbox has some heavy-hitters under its umbrella, with gamers eagerly anticipating the release of Forza Horizon 6, set in Japan. However, after a disappointing 2025, it will take more than promises and statements for Xbox to regain traction in a market dominated by Sony’s PS5 and Nintendo’s Switch 2, both of which have rich libraries of exclusives.
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