Xbox Series X/S — From a Two-Tier Console to "Xbox Without a Box"

On 10 November 2020, Microsoft launched the Xbox Series X (US$499) and Xbox Series S (US$299) simultaneously worldwide. Two SKUs at two price points—a first in home-console history—and two days ahead of PS5, by design.

The story of this Xbox generation, however, is one of losing on unit sales and then redefining what "Xbox" even means.

Two SKUs and Game Pass

Xbox Series X used AMD Zen 2 / RDNA 2 silicon, a 12 TFLOPS GPU, and a 1 TB internal NVMe SSD—on paper, ahead of PS5. The Series S, by contrast, was a 4 TFLOPS, 512 GB, 1440p-target budget model. Two entry points for two budgets.

The connective tissue was Game Pass—a monthly subscription unlocking over a hundred titles. The console was the doorway; the recurring revenue was the prize. It was the first serious attempt to bring Spotify/Netflix logic to home consoles. Quick Resume (multiple games suspended simultaneously), Smart Delivery (automatic best-binary per generation), and xCloud streaming aimed at a gaming experience untethered from any single box.

The Activision Blizzard Acquisition — A US$68.7 Billion Bet

In January 2022, Microsoft announced a US$68.7 billion acquisition of Activision Blizzard. The deal—one of the largest in tech history—endured twenty-one months of scrutiny from the US FTC, the UK CMA, and the EU before closing on 13 October 2023. Call of Duty, World of Warcraft, Diablo, Overwatch, Candy Crush—Microsoft acquired an IP empire.

Phil Spencer, CEO of Microsoft Gaming, framed the deal as the decisive instrument for a strategy of "winning through IP and subscription, because hardware is lost". And immediately after closing, the second part of the bet became visible: Microsoft had no intention of keeping these IPs exclusive to Xbox.

The 2024 Multi-Platform Pivot

In February 2024, Spencer announced that Hi-Fi Rush, Pentiment, Sea of Thieves, and Grounded would ship on PS5 and Nintendo Switch. An official exit from first-party exclusivity.

The reasoning was clear. Industry estimates put Xbox Series X/S at around 28 million units versus PS5's roughly 60 million—a more-than-2× install-base gap. To maximise IP revenue from those titles, Sony's hardware base could no longer be ignored.

Outcomes diverged. Sea of Thieves cleared one million copies on PS5 and entered a second life as a major live-service title. Hi-Fi Rush, critically acclaimed, sold an estimated 137 000 on PS5; its developer Tango Gameworks was closed in May 2024 (later revived under Krafton, which acquired the IP). Indiana Jones and the Great Circle, Forza Horizon 5, and Doom: The Dark Ages followed onto PS5 as a matter of policy, not exception.

"Xbox Is Not the Box" — The 2025 Shift

In 2025, Microsoft took a decisive step. The ASUS ROG Xbox Ally was an ASUS-made portable PC carrying the Xbox brand: Ally at US$599, the higher-end Ally X at US$999. The hardware was not Microsoft first-party; it was ASUS OEM hardware wearing an Xbox software layer.

Spencer insisted that "the next Xbox console itself will be first-party hardware" while simultaneously redefining Xbox as "a software platform that connects all your devices in one place". Xbox was no longer the name of a box but the umbrella for a subscription, cloud, and OS layer.

Leadership held its triumvirate—Phil Spencer (Microsoft Gaming CEO), Sarah Bond (Xbox President), Matt Booty (Game Content & Studios)—but the underlying organisation showed strain: 2025 rumours of Spencer's imminent retirement (which he denied), the serial closure of Xbox studios (Tango, Arkane Austin), and large-scale layoffs.

Looking Back at the Ninth Generation

By 2026, Xbox Series X/S cumulative sales sit at an estimated 28–30 million units and have plateaued—about a third of PS5. On the simple metric of console wars, Microsoft lost.

And yet: Game Pass subscribers exceed 34 million, the Activision Blizzard IP machine produces roughly US$10 billion in annual revenue, and the unprecedented strategy of releasing Microsoft IP on competing platforms is growing the top line. A lopsided scorecard is forming—lose the hardware, win the software and services.

What Xbox demonstrated is an attempt to transform the home-console business from "sell a box" to "sell a service". The transformation is not complete and not unambiguously successful, but every other player in the industry, Sony included, is being pulled in the same direction. In the ninth generation, Xbox lost install base. What it may have gained is the right to rewrite the rules of the home-console business.