From frequent price increases and reduced inventory at major retailers to studio closures and mass layoffs, Xbox hasn't fared well this generation. In fact, 2025 was the worst year on record.
Even in 2026, the situation shows no signs of improving. Microsoft released its second-quarter fiscal results yesterday and announced a 5% decline in Xbox content and services revenue and a 9% decline in gaming revenue.
According to The Verge senior editor Tom Warren, Microsoft blames gaming for a 3% year-over-year decline in its More Personal Computing business (consisting of Windows, Xbox, and Surface) as the console giant continues to underperform.
Xbox hardware revenue fell 32%.
Xbox hardware sales are down a whopping 32%, and while console sales are down across the board (suffering its worst November since 1995 last year), the Xbox Series
By contrast, Microsoft's intelligent cloud business brought in $32.9 billion in the quarter, more than double MPC's $14.3 billion in revenue.
Call of Duty: Black Ops 7 is most likely to blame for the game's declining revenue. Not only did Call of Duty: Black Ops 7 fall short of the standards set by Black Ops 6, but it also underperformed significantly amid stiff competition from Battlefield 6 and Arc Raiders. Not to mention the controversy over the bizarre campaign and AI art plastered throughout the progression system.
Xbox Game Pass Ultimate also raised its price by 50% in October, from $19.99 per month to $29.99 per month, as part of a major restructuring, and according to reports, subscriptions were declining even before this increase. Considering the backlash against rising costs, this decline is likely to increase further.
However, looking at this data, it's worth noting that Microsoft is pursuing above-industry-average profit margins when it comes to Xbox, despite investing more in AI and cutting jobs.
In 2024, Microsoft laid off 1,900 gaming employees after acquiring Activision Blizzard King, and in 2025, it laid off an additional 15,000 people as it redistributed funds to its AI division. Unfortunately, the report says Microsoft is planning another round of massive layoffs this year, cutting between 11,000 and 22,000 jobs as “roles related to AI research and core cloud operations appear to be more stable.”
Microsoft is also currently subject to BDS. That said, there are many people who are boycotting all Xbox products, including Xbox published games, until they are removed from the list.
- brand
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microsoft
- original release date
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November 10, 2020
- Original MSRP (USD)
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$499
- operating system
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Proprietary (Windows-based)
- processor
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Custom AMD 8-core Zen 2 3.8GHz
- solve
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720p – 4K UHD
