The Demise of Xbox in 2025: A Year of Changes

A Struggling Start and a Faltering Finish

Behold the fate of Xbox — a once-proud name now grappling with obsolescence. Following a modest debut during the challenging days of the COVID-19 pandemic in 2020, the Xbox Series X was unable to keep pace with Sony's formidable PlayStation 5. Despite Microsoft's significant acquisitions, it couldn't muster the array of engaging games that gamers desired. In contrast, Sony capitalized on the stellar reputation it built with the PS4 and released a set of attractive exclusive games. As operating costs escalated due to global supply chain disruptions and erratic tariff policies from the Trump era, enthusiasts found even less incentive to choose Xbox, including the less costly Series S. A reevaluation of the Series X last year confirmed its failure to fulfill its expected promise, which solidified the superiority of the PlayStation 5 as the more sensible purchase.

An Unfavorable End to 2025

The year 2025 saw Xbox in poor health, grasping for recovery akin to a gamer on the brink of defeat. During this year, Microsoft scrapped plans for the Perfect Dark reboot and Everwild — two projects that appeared among the few intriguing offerings in its sparse future lineup. Moreover, Microsoft's decision to offer games such as Forza Horizon 5 on the PlayStation 5 led some, including Engadget's Nathan Ingraham, to question the necessity of owning an Xbox.

Further compounding issues was a price hike across Microsoft’s console lineup, with the Xbox Series S starting at $400 and the Series X at $600. The reduced demand prompted retailers like Costco to cease sales of Xbox altogether. Microsoft seemed to surrender during the lucrative Black Friday shopping period, likely realizing that promotional efforts wouldn’t yield improvements in hardware sales.

Game Pass No Longer As Enticing

The Game Pass service, once hailed as gaming’s premier subscription offer, saw its costs nearly double within the past year, with the top-tier Ultimate service reaching $30 each month or $360 annually. Despite efforts to enhance value through cheaper tiers and cloud streaming advancements, the absence of consistently spectacular exclusive titles diminished both the service's and Xbox’s appeal. A few exclusives, like Avowed and South of Midnight, stood out, but plans for the latter include releases on rival platforms like the PS5 and Switch 2 in the near future. With Xbox’s current approach, it's feasible to predict Avowed's journey to similar destiny.

Portable Ventures and Competitor Innovations

An opportunity to rejuvenate the Xbox brand lay with the ASUS ROG Xbox Ally handheld devices. Nevertheless, their steep prices of $600 and $1,000 were barriers for most players. Adding to the challenge, Windows lacks optimization for handheld devices, leaving these new systems incompatible with many legacy Xbox titles. Despite acquiring a foothold in portable gaming, a prospective future handheld Xbox would need a much more attractive price point to contend competitively against products like the $400 Steam Deck, which often sees discounts.

Valve's introduction of the Steam Machine also siphoned away Xbox’s dwindling momentum. Providing a compact gaming setup designed for TVs, it shares the SteamOS at the core of the Steam Deck, a Linux variation admirable for running Windows games. Contrast this with the Xbox, where users have defined limitations, while Steam Machine offers open software installation, even supporting Windows, perhaps setting the stage as Xbox’s next substantial rival.

Reflections on Past Successes and Missteps

Reflecting on Xbox’s history, the Xbox 360 remains the brand’s greatest success, genuinely rivaling Sony’s PlayStation due to its innovation in online interactions and broader third-party endorsement. Conversely, the PlayStation 3 debuted costlier and struggled with software support. However, Xbox's reputation soured with the launch of the Xbox One, criticized for its restrictive always-online policies and inherent surveillance concerns tied to its Kinect camera. Although Microsoft altered the DRM-heavy strategy, the initial damage irrevocably shifted the console market dominance in Sony’s favor.

Looking Forward with a Vision of Change

Amidst declining sales — with reports indicating only 33 million Series S and X units sold versus Sony’s 84.2 million PS5 units by late 2025 — the outlook remains grim for Xbox’s current market footprint. Interestingly, family-centric gaming systems like the Nex Playground even pulled ahead in monthly sales. Given such struggles, Microsoft appears set to reevaluate and possibly reinvent its approach for future Xbox iterations. New collaborations with AMD point toward the development of enhanced handhelds or a powerful Xbox PC hybrid, capitalizing on Microsoft's roots and strategic shift towards integrating gaming with PC user experiences.

This evolving strategy might be what revitalizes the Xbox identity. If Microsoft can merge the familiar strengths of PC gaming with new console expectations, they might yet forge a unique space that their primary competitor, Sony, would struggle to emulate.