Xbox has had a continuing struggle to sell Consoles, with their numbers coming out of the Holiday Quarter of 2025 reflecting this. Microsoft has posted its Q2 2026 earnings, which include the news that hardware sales are down 32% year-over-year. This follows a multitude of declining quarters that stretch back two years.
This report does not feature any actual numbers for console sales revenue, so we can’t say how much profit is lost here, but this is part of a continuing trend. Last quarter, Q1 2026, Xbox saw a hardware decline of 29% year-over-year. Prior to that, in Q4 2025, hardware sales were down 22% year-over-year. Those numbers have moved around prior to that, but this decline is nothing new.
Obviously, the Xbox Series is moving into its 6th year of sales, having released in 2020. A decline in sales is expected as early adopters purchase the system, driving up early runs, but we usually see it take longer to reach these numbers in decline. For comparison, neither the PlayStation 5 nor the original Nintendo Switch has seen this level of decline at this point in their lifecycles, let alone when these numbers started going down years prior.
In fairness, none of this is new and has been dominating the news cycle regarding the Xbox platform for years. Microsoft has also been pushing further into support of its Xbox Game Pass service, which they have begun adding to several platforms, with its current marketing campaign for it, entitled “This is an Xbox,” outright telling players you don’t need an Xbox console to play Xbox.
Xbox has also seen a rise in pricing twice over the last year. This saw the least costly Xbox platform rise to $400, with the most expensive reaching an $800 price tag. The recently released ROG Xbox Ally featured a price tag of $1000. These high prices are partly impacted by the U.S. tariffs that were implemented by President Trump, which have impacted all hardware manufacturers. With the US being Microsoft’s biggest market, these increases in import costs have taken their toll.
Xbox is aware that its console business is suffering and is still promising true next-generation hardware to follow up on the Series X/S, with no plans to exit the console market despite this. They stated this next system would be a “very premium, very high-end curated experience.” There have been rumors that the plan is to back off on additional hardware, but the company has denied these claims. Other rumors have suggested a more computer-like platform where services like Steam would be available.
Remember to follow us on Twitter, Facebook, and Bluesky to keep up to date on everything we have going on!
