Xbox's current situation reminiscent of SEGA Dreamcast fiasco, ex-PlayStation boss says

Microsoft is beleaguered in the console market, handily beaten by Sony and Nintendo, and the company now has to make a hard decision about the future of Xbox consoles--at least that's what ex-PlayStation boss Shawn Layden thinks.

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Xbox is at a very contentious point right now, having broken exclusivity on first-party games in a bid to maximize profits. Players feel this could diminish the Xbox platform long-term as exclusive content traditionally helped propel hardware sales--people would buy Xbox to play games like Halo, Gears of War, and Forza. Ex-PlayStation boss Shawn Layden tells GamesIndustry.biz that Xbox consoles just don't have enough differentiation to claw back console market share, and that Microsoft's current stance in the console market reminded Layden how SEGA stopped making consoles in 2001, just 3 years after the failure of the Dreamcast.

"Watching what Xbox has been doing recently, I do get Dreamcast flashbacks," Layden said, pointing to SEGA's spiraling demise in the console market in the early 2000s.

"I think Sega realized they just were better off being a software house. I think Microsoft is in that same sort of fork in the road. And I don't think their hardware offering is persuasive enough to make up the ground they've lost."

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Microsoft's Xbox hardware revenue has significantly dropped over the past year or so, and reports indicate that the Xbox Series X/S duo have shipped up to 35.9 million units as of December 2024.

For comparison, the PS5 is already at 80.3 million shipments, the Switch shipped over 153 million consoles, and Nintendo's new Switch 2 just made history as the fastest-selling system at launch.

There's so much ambiguity around what Microsoft will or won't do that it's hard to say what will happen. Reports also indicate that the new Xbox consoles will be more like PCs and could be manufactured by PC part-makers like ASUS and MSI.

This concept was tried before with Valve's failed Steam Machines hardware.

Then again, Microsoft did just team up with ASUS to make the first-ever Xbox handheld--well, it runs Windows 11 and is a PC, not an Xbox console--called the Xbox Ally X.

Publicly, Xbox management has confirmed that a next-gen Xbox console is in the works powered by AMD's new AI-infused chips. The information stops there and we haven't received much in the way of clarification. Meanwhile, the games sphere heavily speculates on whether or not Microsoft will stop making Xbox consoles or not.