Xbox has been combating console gross sales not too long ago, and issues did not enhance within the 2025 vacation quarter. Microsoft simply reported its second quarter 2026 earnings, together with information that {hardware} gross sales had been down 32% year-over-year on a quarterly foundation. quarter {Hardware} discount.
There aren’t any precise numbers to point out how a lot income is being misplaced right here, however a take a look at previous quarters offers you an thought of ββhow powerful that is for {hardware}. Final quarter, within the first quarter of 2026, {hardware} was down 29% yr over yr. Within the earlier quarter, This fall 2025, {hardware} was down 22%. The quarter earlier than that? 6% lower. Earlier than that? 29% lower. Earlier than that, it was 29% within the first quarter of 2025, i.e. July-September of 2024. Wanting additional again from Microsoft’s earnings report, year-over-year quarters noticed a decline of 42% (superb) in This fall of 2024 and 31% in Q3. In reality, you’d must go all the way in which again to Q2 2024, or October to December 2023, to search out the final time in that interval that Xbox {hardware} income was higher than the earlier yr. That was a whopping 3% enhance in comparison with the vacation quarter.
And the quarter earlier than that, it was down 7%, earlier than that it was down 13%, earlier than that it was down 30%, earlier than that it was down 13%, and eventually within the first quarter of 2023, July to September 2022, it was up 13% yr over yr. At this level, the numbers are lastly beginning to present constant year-over-year enchancment, largely as a result of proximity of Collection S and X launches.
Come on, have a look. the extraordinarily regular It is no shock {that a} six-year-old sport console does not promote in addition to it did within the first few years after its launch. That is pure. Early adopters have a tendency to purchase up consoles in droves upon launch, and folks hold shopping for till distributors run out of inventory, extra are produced, and the vast majority of fanatics who need the console already personal it, then gross sales gradual because the console ages. But it surely…often takes somewhat longer to get to that time. For comparability’s sake, there may be proof that neither the PlayStation 5 nor the Nintendo Change have had such main points with such a big distribution system at this level of their respective lifecycles, lower than three years after launch. There could also be a cause why Nintendo and PlayStation have {hardware} gross sales numbers for Change and PS5, however Xbox has no official gross sales numbers for Collection S and X in any respect.
This could come as no shock to anybody paying consideration. We have been studying headlines over the previous few years in regards to the struggles of the Xbox Collection consoles. In the US, Xbox console gross sales hit an all-time low in November 2025, as {hardware} gross sales declined for a number of years in a row throughout what is usually the busiest retail month on Black Friday.
These latest struggles are additionally doubtless associated to the 2 value hikes for Xbox consoles this yr, with the most cost effective Xbox going for $400 and the most costly rising to an unimaginable $800. The not too long ago launched ROG Ally went on sale final yr for a whopping $1000. And far of the upper value is said to tariffs, so the US, Xbox’s largest market, is primarily affected. The typical value per Xbox unit within the US rose 30% year-over-year in 2025, in keeping with Circana analyst Mat Piscatella in an interview final December.
Xbox appears effectively conscious that its console enterprise has taken a critical hit. Whereas a brand new next-gen console is promised to observe the sequence, it is also stated that such a console might be a “very premium, very high-end curated expertise.” And whereas there have been latest rumors that the corporate is contemplating scrapping its {hardware} plans, Xbox nonetheless denies it, regardless of former Xbox founding members saying “Xbox {hardware} is lifeless.”
Probably the most notable quantity in Microsoft’s monetary outcomes yesterday was a decline in {hardware}, however that does not imply software program efficiency has improved considerably. Content material and providers income was down 5% year-over-year, and income at Microsoft’s Extra Private Computing division was down 3% year-over-year on account of total gaming declines. In an investor presentation, CFO Amy Hood stated the income decline was “pushed by first-party content material that impacted your complete platform,” suggesting that first-party video games (Name of Responsibility, maybe?) weren’t performing in addition to anticipated.
All in all, it is one other catastrophe for Microsoft’s gaming division.
Rebekah Valentine is a senior reporter at videogameaddicted. Do you’ve gotten any story suggestions? Ship it to rvalentine@videogameaddicted.com.