Judging Xbox in 2025 by any metric shows a brand only kept afloat thanks to the bankrolling of Microsoft. Console sales are dismal, subscriptions appear stagnant, layoffs run rampant, and it has poured what can only be described as an irresponsible amount of money into acquisitions. If it wasn’t clear enough from the pivot away from exclusives, the marketing strategy of “This is an Xbox” would be a clear white flag of surrender in any other generation.
But Xbox isn’t giving up on the war, simply looking ahead to winning future battlefields.
Setting Themselves Up for the Long Play
Xbox has been on the back foot ever since the reveal of the Xbox One. Since that disastrous launch, it has proven to be a Sisyphean task to regain that lost ground over controversial DRM practices, lack of first-party support, requiring the Kinect, and other practices seen as normal now but were too much all at once in 2013. PlayStation players are locked into their ecosystem, and PC players are loath to even boot up a separate launcher besides Steam without a strong incentive.
While all the moves Xbox has been making as of late may look like capitulation and a backing down from competing with Sony and Nintendo to the point where it is even supporting its competitors with its flagship IPs, they paint a picture of an Xbox playing the long game.
The major benefit Xbox has is that its parent company, Microsoft, has been willing to support the brand as a loss leader for so many years. Even at its strongest, Xbox was never a big economic driver. It was likely bleeding cash for two and a half generations before purchasing Activision Blizzard put its profits back into the black (though it still needs to earn back that nearly $69 billion upfront cost).
That level of leeway, plus the largest stable of massive IPs on the market for reliable sales, affords Xbox the opportunity to spend the rest of this generation not fighting a battle it has no hope of winning, but rushing ahead to be ready for what the future of gaming is shaping up to be.
Out with the Old Box, In with the New Services
The era of exclusives is all but dead. Nintendo is the only holdout that hasn’t embraced PC yet, while PlayStation is still trying to find the right balance for when and how to bring its first-party titles to Steam. Games simply take too much time and money to find success on a single platform anymore at the scale players have come to expect. Games also aren’t the console-sellers they once were. People are no longer going out of their way to buy an Xbox to play Halo like in 2001. Xbox was backed into a corner at first when giving up its first round of exclusives, but has now turned that desperate play into its salvation, looking to bring in money from other consoles while still pushing Game Pass on its own platform.
Game Pass is Xbox’s Trojan horse to the point where the Game Pass brand is almost more ubiquitous than Xbox itself. Anywhere Xbox can get its service, from TVs and smartphones to handhelds and VR headsets, it will do it. It wants its services and software to be everywhere, and not because it’s pro-consumer but because it knows it can’t sell you a box anymore. It also knows boxes themselves are on the way out which explains why it is partnering with so many other hardware manufacturers.
I feel fairly safe assuming that there will be one more console generation, but I believe Xbox will be using it as a transitory one. You can buy a box if you want, but hardware is not where the industry is heading, and Xbox knows it. Services and cloud will continue to become larger parts of the market, while physical games and hardware will continue to shrink.
Perhaps even more important than being available on all hardware is the new push to be the unified digital storefront. Just this week, Xbox has updated its app to allow users to access games from all the major PC launchers like Steam, Battle.net, and Epic from within the Xbox app. Odds are this functionality will apply to future Xbox hardware as well. So long as it is functional and smooth, that’s the kind of convenience that will convert an otherwise stubborn audience to use a different app.
It’s possible that Xbox is making a bad bet here. There’s always a chance that the market will change course and hardware will be bigger than ever, but nothing we’re seeing now seems to suggest that. Xbox has established the best services, cloud, and agnostic support today to be the de facto market leader when we cross that tipping point.
