The Next-Gen Xbox Project is in Danger
Things are not calming down on the Xbox front. Sales declines following a 50% increase in Game Pass prices, significant losses in Call of Duty revenue, and the withdrawal of Xbox consoles from shelves by some retailers have severely impacted Microsoft’s gaming hardware plans. Now, a new claim has raised the possibility of the next Xbox console being canceled.
Uncertainty Prevails for the Next-Gen Xbox
SneakerSO, known for his leaks in the gaming industry, claimed on NeoGAF that Microsoft’s next-gen Xbox plans have been “put on hold.” SneakersSO stated, “The Game Pass and Call of Duty strategy didn’t pan out as expected. This has thrown Xbox hardware plans into uncertainty.” Allegedly, Microsoft is now shifting its focus to becoming a “software publisher focused on profitable intellectual property.”
Leaker source SneakersSO is known to have shared accurate information in the past. It announced Xbox’s multi-platform strategy for 2023 before the official announcement. The Verge editor Tom Warren also stated that the source was “intimately familiar with developments within Microsoft,” adding that this claim wasn’t entirely unfounded. Warren also emphasized that traditional console generations are over, with gradual upgrades similar to PCs now on the agenda.
However, SneakersSO isn’t alone. Other industry sources are making similar claims. Timdog claimed that Microsoft executive Judson Althoff “canceled hardware plans” and that Xbox would become a “complete third-party publisher.” Another leaker account, BRAP, supported the claim with a concise message: “Hardware production has stopped.”
According to Microsoft’s new strategy, the Xbox brand may not disappear entirely, but it could evolve into a different form. SneakersSO says the company could work with a “third-party manufacturer, similar to Asus’s handheld console,” but even that plan is currently uncertain. If this scenario plays out, Xbox could eventually become an OEM (original equipment manufacturer) that simply licenses brands.
The most alarming aspect of these claims is the impending wave of layoffs. SneakersSO stated that a new downsizing at Xbox will occur in the first quarter of 2026, and that it will be “as significant as previous ones.” Microsoft previously laid off approximately 9,000 employees. This new wave is reportedly followed by “studio restructuring.”
While Microsoft has yet to make an official statement, industry sources agree that Xbox’s future is evolving toward a software and services-focused structure rather than hardware. It appears that the concept of “next generation” in the gaming world is no longer as clear-cut as it once was.
