Microsoft says Xbox has been losing the console war since 2001

As Microsoft takes on the FTC over its $69 billion acquisition of Activision Blizzard, the Xbox maker has admitted to something everyone probably already knew: it’s lost the console war.

Read more: Sony will not share PS6 information with Obligations Developers if owned by Microsoft

The “console wars” here refer to the perpetual fights between manufacturers like Nintendo, Sony and Microsoft to dominate the market and outsell their rivals in a given generation of hardware. In a document presented at a court hearing on June 22 by Microsoft (and seen by my city), the company talked about how it’s been losing the console war against Nintendo and Sony ever since it burst onto the scene in 2001 with the beefy original Xbox. It suggests that both the GameCube and PlayStation 2 outsold the first Xbox by a “significant margin”. And as Microsoft stated in the document, it’s been that way ever since, even now.

“Xbox has lost the console war and its rivals are positioned to continue to dominate, even by taking advantage of exclusive content,” Microsoft wrote. “The Xbox console has consistently ranked third (out of three) behind PlayStation and Nintendo in sales. In 2021, Xbox had a 16 percent stake, while Nintendo and PlayStation held shares of (redacted) and (redacted), respectively. Similarly, for console revenue and the share of consoles currently in use by gamers (‘installed base’), Xbox follows at 21 percent, while PlayStation and Nintendo have shares of (redacted) and (redacted), respectively.

According to hardware and software sales tracker VGChartzMicrosoft’s latest consoles, Xbox Series X and Xbox Series S, have only sold 21 million units as of April 2023. Meanwhile, the PlayStation 5 and Nintendo Switch are neck-and-neck with roughly 36 million units each, though the handheld-console hybrid has a slight lead.

As a result, Microsoft said it has essentially given up on competing in the current console wars, choosing instead to focus on delivering software (that either hasn’t come out or has flopped) to its player base. We’ve seen this shift in most of what Xbox has been doing today, like its intense focus on building out its Game Pass subscription service. Microsoft seems to be less interested in being number one in the market and more dedicated to becoming the industry’s first Netflix.

“Having lost the console war, Xbox is betting on a different strategy than Sony (and Nintendo),” Microsoft wrote in the document. “Xbox makes a profit through game sales, not console sales. This is because Xbox sells its consoles at a loss, effectively subsidizing gamers’ purchase of the hardware in the hopes of making up (lost) revenue through the sale of games and accessories.”

my city reached out to Microsoft for comment.

Read more: Is PlayStation really worried about losing? Obligations To Microsoft? Private emails say no

These admissions come just as Microsoft has also stated that it is looking forward to the next generation of consoles. to start in 2028. This would indicate that Obligations it would still make its way to competing platforms if said game was released if/when the company acquires Activision Blizzard. That said, Sony isn’t terribly interested in the acquisition, and Sony PlayStation boss Jim Ryan admitted as much at the same hearing. would not share information about a hypothetical PlayStation 6 with Obligations‘s devs in case the acquisition is approved. Obviously, this could have all sorts of repercussions for Obligations fans on PlayStation.