Xbox consoles continue to suffer in the market, with numbers painting a worrying picture for Microsoft’s gaming division.
Financial data for the first quarter of fiscal 2026, which covers the period between July and September 2025, shows a contraction in hardware sales of 29% compared to the same period a year earlier. This is a particularly significant figure, considering that it represents the thirteenth loss-making quarter out of seventeen starting from 2022.
The overall performance of the gaming division recorded a decline of $113 million, equivalent to a decline of 2% year-over-year. However, the trend is not uniform across different business segments.

While consoles struggle to find buyers, the content and services sector maintains substantial stability, with a symbolic growth of 1% which is completely canceled out if calculated in constant currency.
Contrasting dynamics emerge within the content sector that deserve attention. On the one hand, Xbox Game Pass continues to attract subscribers with growing volumes, as well as sales of games developed by studios outside the Redmond house.
On the other hand, first-party titles, those created directly by Microsoft’s internal studios, disappointed expectations with subdued performances that slowed down the overall expansion of the segment.
The data on the collapse of hardware takes on even more worrying aspects if analyzed from a historical perspective.
The 29% decline recorded in this quarter does not represent an isolated anomaly, but the confirmation of a consolidated negative trend. The same period of the previous year had already shown an identical decline of 29%, signaling that the situation shows no signs of improving.
Considering the constant currency, the decline even reaches 30%, highlighting how it is not a question of exchange rate effects but of a real commercial difficulty.
Analysts’ eyes are now focused on the next quarterly reports to evaluate two potential game-changers. The first concerns the commercial impact of the ROG Xbox Ally, the portable console developed in collaboration with ASUS which could attract a new range of users.
The second key element will be price increases applied to Game Pass starting in October, a move that could partially offset hardware losses with higher margins on subscription services.
Microsoft’s strategy seems increasingly oriented towards a business model focused on digital services rather than on the sale of traditional consoles.
However, the persistent weakness of first-party titles raises questions about the company’s ability to produce exclusive content attractive enough to justify investing in the Xbox ecosystem. While third-party games sell well, the lack of internal blockbusters represents a significant strategic problem for the Redmond giant.