Would a new Xbox Series model help Microsoft’s gaming division? Discuss.

Commenting on financial results or quarterly earnings is not the most exciting kind of reporting in the video games industry, but Microsoft’s latest deserve a closer look: the company released its Q3 numbers and it seems that there’s an alarmingly weak spot in its Xbox business. While during that period the company managed to increase both its overall revenue and net income year-over-year (by 7% and 9% respectively), and its Xbox content and services revenue is up by a modest 3% year-over-year (helped by new Game Pass subscriptions), its Gaming division revenue was down by 4% and its Xbox hardware revenue was down by 30%, which… yes, is as bad and concerning as it sounds.

Microsoft tried to downplay this steep decline in Xbox Series S/X shipments (the only models available nowadays) by comparing them to those of 2022 “that benefited from increased console supply”. No matter how one frames this, though, it’s obvious that Xbox sales have been slowing down at an alarming rate in 2023. It’s even more of a concern if put in the context of market competition: in the same quarter, Sony has been able to finally resolve the availability issues it’s been facing with the PlayStation5 since launch, resulting in a notable increase in sales as of late.

This can give the impression that there’s a direct connection between these two facts: that, because people are now able to get their hands on a PS5 without waiting or overpaying for it, they may not be interested in “settling for” an Xbox anymore. This may or may not be true, obviously, but is does not look good for Microsoft — especially given the fact that the PS5 has already been outselling the Xbox Series almost two to one (despite its availability issues). The question is: can anything be done about it short-term and, if yes, what would that be?

Xbox Series X “Pro” to the rescue?

One option available to Microsoft for giving its Xbox hardware sales a much-needed boost: maybe… a new Xbox model? Rumors about a PlayStation 5 Pro model have been making the rounds for the better part of a year now — it’s most probably coming at some point, whether gamers actually need it or not — so the release of a more powerful, more technically impressive Xbox Series system is also quite likely. The Americans have played that card before, after all, with the Xbox One X during the previous console generation.

Provided that it happened within the next 9 months, such a move would be granting Microsoft the first-mover advantage (Sony is not expected to release a PS5 Pro before autumn 2024 at the earliest), as well as presenting other opportunities. By releasing an even better Xbox Series (Pro? XS? XL? Something else entirely?) the company would have the opportunity to lead the current gaming console generation in terms of raw processing power for some time, pushing the boundaries of graphics fidelity further through advanced ray-tracing, high frame rates and true 8K support.

Microsoft could introduce such an Xbox model at the original price of the Xbox Series X and, at the same time, offer gamers the Xbox Series X at a lower price point (which would give that system an advantage over the original PS5… at least for a time). It would also be the perfect opportunity for retiring the Xbox Series S — which has definitely caused problems for developers, holding a number of AAA productions back because of its hardware limitations — without losing face. This could very well prove to be a win-win-win scenario for a company that can afford to lose money in order to improve its market position.

A problem with hardware that’s actually a software problem

Truth be told, though, the introduction of a new, even more powerful Xbox — along with the changes in the Xbox Series lineup that would entail — in the marketplace would only temporarily help Microsoft’s cause. It’s not about Sony releasing the PS5 Pro at some point, but more about what to play on the current or any future Xbox model. It’s quite clear that the failure of Microsoft Game Studios to offer quality, AAA exclusive games to Xbox fans on a regular basis over the last 3 years has inevitably affected the hardware side of things.

Simply put: the kind of enthusiasm one could clearly see in the Xbox community during Q3 2020 — before and around the launch of the Series S/X systems — is just not there anymore. More than 20 million Xbox fans have supported Microsoft’s efforts, purchasing its new systems in the hopes that they’d be playing amazing, exclusive next-generation games on launch day, for free, as part of their Game Pass subscription, but things did not play out that way at all. Game Pass is still a great deal for hardcore Xbox fans and mainstream consumers alike, but it’s not driving Xbox Series S/X sales nearly as much as it could because those exclusive next-gen games never arrived.

Microsoft will strive to redeem itself later this year — beginning with Redfall in May and Starfield in September — but it could already be a case of too little, too late: what Xbox gamers were really looking forward to when purchasing an Xbox Series S/X was the next Forza MotorSport, the next Fable, the next Hellblade, the next Outer Worlds, the next Perfect Dark, as well as promising originals such as Avowed or Everwild. All these are coming at some point in the future, but a 2023 time frame already seems highly unlikely for any of them.

With the PS5’s user base surpassing the 35-million mark recently and a couple of exclusive heavy-hitters, including Spider-man 2 and Final Fantasy 16, on schedule for 2023, Microsoft’s odds of offering Sony strong competition in this console generation are not looking good. Can the company turn things around in 2024? We’ll just have to wait and see.