On February 23, the head of Microsoft's gaming division, Phil Spencer, left the corporation after 38 years of service. Under his leadership, Xbox changed, but things didn't go as planned. Let's analyze what Spencer wanted to achieve and how the rules of the game have changed recently.
Xbox for Everyone
Phil Spencer worked at Microsoft for 38 years, starting in 1988. For the last 12 years, he headed the corporation's gaming division. His leadership will be remembered by gamers as a warm period when the Xbox bosses did everything to please their audience.
To this end, in 2017, Microsoft launched the Xbox Game Pass subscription service — a gaming equivalent of Netflix. Wanting to provide the subscription with content, the corporation began buying up many studios and announcing a plethora of games. They were supposed to attract a lot of attention to the Xbox brand and subscription. And the acquisition of ZeniMax Media and Activision Blizzard made Microsoft one of the largest game publishers in the world.
The new Xbox was also open to players. It was released in two versions: a weaker but cheaper version — Xbox Series S — and a more powerful but expensive one — Xbox Series X.
The plan was perfect. You could buy an Xbox Series S, subscribe to Game Pass, and enjoy hundreds of games at minimal cost, while the corporation's bosses received a stable income. And players took advantage of this, because of all the Xbox Series sold, the younger version accounted for about 75% of sales. All because of the low price.
Nevertheless, Microsoft faced problems, because the costs of the gaming division turned out to be too high.
The purchased studios failed to provide the expected flow of games. Few projects were released, and those that were, failed. This was due to the studios' excessive creative freedom, which they used by constantly delaying releases and extracting funds from the corporation. The process only improved by 2024-2025, when Microsoft Gaming games began to be released regularly, and their quality became decent.
Another disadvantage was Microsoft's strange approach to advertising its projects. Many games received minimal PR support and were released without due fanfare, as a result of which, if they did not fail, they were severely underperforming. Sometimes this led to the closure of studios — remember Hi-Fi Rush and Tango Gameworks. Fortunately, the developers were rescued by the South Korean publisher Krafton.
The plan to get rich thanks to Call of Duty also did not turn out as desired. Black Ops 7 lost in the reputational battle to its competitor — Battlefield 6 — and the soaring price of Game Pass discouraged many players from joining the ecosystem. COD topped the sales charts in December, but that didn't save it: the project has a score of 65 out of 100 from the press and 1.6 out of 10 from players on Metacritic, and the game became the lowest-selling part of the franchise in the last 17 years.
Even though it's a long-term strategy, the failure of Black Ops 7 put extra pressure on Microsoft's sore spot instead of smoothing out the impressions.
Costs That Need to Be Recouped
All these problems were compounded by others: the global economic situation and the boom in artificial intelligence. This forced the bosses of Microsoft to revise the Xbox policy.
Microsoft Gaming began to expand, changing the concept of "Xbox" towards multiplatform. The new Xbox Everywhere strategy implied the availability of Microsoft games everywhere possible: on Xbox consoles, smartphones, PCs, in the cloud, on portable devices, and even on competitor consoles — Sony and Nintendo.
Prices for Xbox began to rise. The cost of devices increased twice last year: in spring and autumn. The Series S first rose from $299 to $379, and then to $399. For the Series X, the price jumped from $499 to $599 in May, and rose to $649 in September.
As a result, Xbox sales around the world began to fall rapidly. Consoles are being removed from store shelves, and in Japan, 75% fewer devices were sold in 2025 than in 2024. And a couple of years ago, Microsoft dreamed of conquering the Japanese market. Even Starfield was translated into Japanese. And now the console from Microsoft has lost its relevance.
Game Pass also lost its meaning, as the subscription also became more expensive. Today, a month of Game Pass Ultimate will cost you $30. Although at the start of the generation, the price tag was half as much — $15. This jump caused a storm of indignation online — disgruntled players even "crashed" the gaming division's website and the Game Pass unsubscribe function. Any manipulations with the service gave errors.
Now it's easier to buy two or three games you're interested in a year for $70-80 than to spend $360 on a subscription for projects you won't play. Moreover, you can play purchased games at any time, but with a subscription you'll have to adjust. After all, if it ends, access to the library will disappear.
The most affordable way to join the world of games has been blocked.
Along with the increased prices, Microsoft began to optimize the gaming direction and not only.
Last year, the corporation experienced several waves of layoffs: at the beginning of the year, in May, in July, and at the beginning of autumn. More than 15 thousand people throughout Microsoft lost their jobs, many of whom were part of the gaming division.
The July wave of cuts was particularly painful: according to analysts, about 50% of the 9,000 employees laid off belonged to Microsoft Gaming. Several games were canceled then, including the reboot of Perfect Dark and the interesting MMO Blackbird from ZeniMax. And Romero Games — the studio of John Romero, the creator of DOOM — which was working on an unannounced shooter, lost funding.
Xbox as PC
But the Xbox bosses didn't stop there.
Thus, Sarah Bond — the former president of Microsoft's gaming division, who left her post along with Phil Spencer, stated: the next generation Xbox will be a premium and very carefully thought-out product.
I want to understand why the console should be premium in principle? After all, the concept of a game console implies that it is an inexpensive device, accessible to everyone — you buy it once and play.
Considering that today the prices for computer components continue to rise, it's scary to imagine how much a "premium" Xbox will cost in the future. If the price tag exceeds $800-900, will many be able to afford it? This will further hit Microsoft's fragile position in the gaming market.
The answer probably lies in the fact that the next Xbox will not be a console at all. It will be a PC with a custom operating system. According to journalist Jez Corden from WindowsCentral, the device will turn into a "Windows 11 PC" with a console interface. This is also confirmed by the fact that third-party stores will appear on the next Xbox. At least the Epic Games Store, as confirmed by Steve Allison, head of EGS.
The development of Microsoft Gaming in this direction is logical. Abandoning exclusives and entering multiplatform will only benefit everyone. And a PC in the form of a console is a good thing, Steam Deck is an example. If you decide to purchase such a device, it will pay off with games, especially if you already have a large library on PC.
But the way they are doing it, killing their own console in the usual sense, is debatable. Xbox has tens of millions of fans who love this device since the very first iteration. Many of them will probably refuse to buy the next Microsoft console. However, the corporation doesn't care, because "Xbox is everywhere."
In addition, the question arises: what about backward compatibility? Now on Xbox you can play not only current releases, but also a huge list of projects that were released on previous generations, starting with the very first Xbox. What will happen to them? Especially with those games that are still not available on PC, such as Fable 2. Will the new PC in the form of "Xbox" support them? If so, how? Will Microsoft create some special system for this or just stick an emulator into the software of the new device? Phil Spencer advocated for maintaining backward compatibility, but what will happen without him is an open question.
Before leaving, Sarah Bond said that the next Xbox is already in development and in this regard, it is unlikely that anything will change. We are in for an interesting experiment.
New path?
Changes in Xbox impressed few people. Third-party developers are increasingly refusing to release their games on the Microsoft device. According to the State of the Game Industry Survey, only 20% of respondents are not against releasing their projects on Xbox Series. On PC — 80%, and on PS5 — 40%. Even on Nintendo Switch 2 — 39%.
This is important because the platform holder receives a percentage of each copy sold on the console. And this is a significant part of the income. You could say — the main one. It turns out a paradox: Microsoft is trying to earn as much money as possible, but the methods they have chosen only repel both players and developers.
The results of the second quarter of 2026 are disappointing: Xbox's total revenue fell by 9%, console sales decreased by 32%, and revenue from content and services decreased by 5%. The blame lies with games from internal studios, which never became hits.
All this was noticed by the Microsoft leadership. If Phil Spencer's resignation was planned, as journalist Tom Warren said, then Sarah Bond's departure was a surprise. After all, she was presented as Phil Spencer's successor. It was she who came up with the Xbox Everywhere strategy.
Immediately after Sarah Bond's resignation, rumors appeared that the new leadership plans to return exclusives. The reason for this was the response of the new head of Microsoft Gaming — Asha Sharma — to one of the users on the social network X. The player wrote that the main franchises — Halo, Gears, Forza, Fable — should only be released on Xbox, to which Sharma replied: "We hear you." Whatever that means.
You can read more about Phil Spencer's legacy and the appointment of the new head of Microsoft Gaming in a separate article: «Phil Spencer left. Xbox is taking a course towards money, not players».
What's the bottom line?
Now it is almost impossible to predict the future of Xbox. It all depends on the decisions of Microsoft and the new head of the gaming direction.
If Microsoft continues to release games on all available platforms, they will be able to recoup their investments in the long term. And the love of old fans will be replaced by recognition from a much wider range of players.
Because returning to exclusives looks stupid. There is no guarantee that such a move will return the Xbox brand to at least its former position, increase hardware sales, and the console will be able to compete with other platforms. Although this will please loyal fans, players are unlikely to rush to buy Microsoft consoles and games en masse, as before.
And it would be foolish to stop releasing Microsoft games on Sony and Nintendo consoles now — in the PlayStation Store, Xbox Game Studios games are consistently in the top sales and receive high ratings from players.
The only realistic option for changes is to release games on competitors' devices, but with a delay. Approximately the same way Sony does with PCs, when their games are ported a couple of years after release on PlayStation. Although even they, according to Jason Schreier, this strategy was not successful. But that's a completely different story.
