Xbox console revenue hits 12-year low over holiday 2025

Following a not-inconsiderable price hike, Microsoft is apparently having a hard time convincing gamers to buy its Xbox Series consoles.

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Microsoft's games division didn't have the best results in Holiday 2025. Xbox generated ~$5.96 billion over the season, down some $600 million over last year, driven by lower-than-expected results from game sales, microtransactions, and subscriptions.

The hardware segment was more bad news, at least on a year-to-year comparative basis: Microsoft made a new 12-year revenue low for Xbox console sales throughout Q2'26, which is the Holiday 2025 period. According to data estimates, Microsoft made just $688 million from Xbox Series console sales in the critical three-month holiday window, down -32% year-over-year and representing the lowest results from FY15-FY26.

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The Xbox Series has proven to be Microsoft's least-favored console generation, and that was before the price hikes; convincing data estimates have the Xbox Series generation at 35.9 million as of February 2025. Microsoft doesn't reveal sales figures any more, but contenders Sony and Nintendo are all too eager to boast about high multi-million sales; the PS5 has broken 84 million sales, and the Switch is at 154 million, with the Switch 2 already at 1/4 the Xbox Series sales estimates with over 10 million sales.

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Microsoft's recent price hikes also did not help its case, leading to a generation with a $799 video games console, neither did the constant assurances that every other device is also an Xbox as part of their confusing advertising campaign.

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The interesting thing here is that this isn't actually bad news for Xbox on a short-term basis.

Remember that Microsoft produces every Xbox console at a loss, so producing fewer consoles can technically help boost Xbox's margins. It's implied that could be happening here, as lower inventory would yield lower sales, but that doesn't account for overlap.

Reports also indicate that Microsoft is stressing the Xbox division to deliver 30% profit margins.

Right now, Xbox is at a transitional moment, and reports indicate that Xbox consoles will soon become actual PCs; the next-gen Xbox isn't expected to be a console, but a hybridized melding of Xbox and Windows into a single device.

Gamers are likely holding off in buying an Xbox because all of Microsoft's new games will come to PlayStation anyway as Xbox continues its strange--yet effective--synergistic mutualism with its friend-foe competitors.