Xbox is in a weird place, that much we all know.
The console war is officially over. Microsoft has capitulated to PlayStation, and has begun shipping core exclusive franchises like Forza Horizon onto its arch console rival. Microsoft has essentially opted into accelerating the decline of its Xbox Series X|S hardware, which, without exclusive unique games, will solidify PlayStation's place as the king of the living room. Although, being real, that latter point was always true. That doesn't mean Xbox doesn't still have a future in hardware, though.
More so than ever, gamers of all stripes are embracing a plurality of devices rather than any singular "place" to play. Evidence of this can be seen in PlayStation's support of Steam on PC, which eliminates the need for Windows PC gamers to consider buying a PlayStation at all in a lot of cases. Indeed, Steam recently hit the 40 million user milestone, outpacing growth for all the major console players as of writing.
To that end, Xbox has a unique opportunity to anchor itself in that growth. After all, Steam is 96% a Windows-based gaming platform, and Microsoft has the advantage of pre-installing its own PC gaming content onto every Windows device out there. PC has been a growth vector for Xbox to that end, even as Xbox console sales continue to stall. But, there is a rare opportunity for Xbox to have a late-cycle bump in the form of Grand Theft Auto 6.
Recently, we spoke to Rhys Elliott of MIDiA Research to see what the data is saying about Xbox's near-term future.
Subscription growth is stalling, but GTA is mainstream enough to bump it
It’s no secret that Microsoft is underperforming compared to Sony in the console hardware space," Elliott explained. "In [2024] Q4, PlayStation sold 9.5 million PS5s (the most it has ever sold in a quarter) and its hardware revenue was up 23% year on year. Meanwhile, Xbox was down 29%." In terms of business growth, however, Elliott says this fact doesn't matter.
"Xbox has been tactfully shifting from a hardware brand to a software and services one over the past decade. Inorganically, Xbox is now one of the world’s biggest console and PC publishers globally, thanks to its acquisitions." Elliott remarked upon the pressure Xbox is feeling from Microsoft corporate to find growth, which is something Xbox lead Phil Spencer has alluded to in previous interviews. Some of that growth is coming via PC and Xbox Cloud Gaming (which runs on Xbox hardware, by the way), but Rhys Elliott noted that the Xbox Series X|S might still have one final trick up its sleeve.
"The Series X|S and PS5 generation has been won, but Xbox could use the release of Grand Theft Auto 6 as a last hurrah for its Series X|S generation, thanks to the low price of the Series S." Elliott explained. "Like Rockstar’s other flagship titles, GTA 6 will hit PlayStation and Xbox before it hits PC. Therefore, it could pay off for Xbox to have a significant Series S push and fire sale to tie in with GTA 6 — as one last hurrah for this generation. The marketing team should be banging the drum, highlighting that 'the Series S is the most accessible way to play GTA 6.' A sub-$200 Series S could be an enticing entry point to GTA for cash-strapped consumers, of which there are many, thanks to today’s tumultuous economy and cost-of-living crisis."
I've written previously myself how a marketing campaign with Grand Theft Auto 6 tied to the Xbox Series S could be a powerful parting shot for the Xbox Series X|S generation. But, as Elliott explains, the "blue" elephant in the room is that it most likely won't be Xbox winning marketing rights for the game.
"The sad-dad blue elephant in the room here is the likelihood that PlayStation – not Microsoft – will secure the marketing rights to GTA 6. Hogwarts Legacy got plenty of non-console owners to buy consoles, and most landed on the PS5, owing to PlayStation securing the marketing rights. It is worth noting that PlayStation would very much want the same thing to happen with GTA 6. Take Two also of course wants to sell the most copies it can and would do so via PS5’s higher installed base. That’s why I reckon PlayStation will get the rights."
Rhys Elliott noted too that, with Xbox Game Pass and other subscription services falling short for growth, the requirement of "paid online multiplayer" via PSN Plus and Xbox Game Pass Core could also get a bump from GTA's popularity. But, if Xbox doesn't land the marketing rights, it's unlikely Xbox would be able to capitalize beyond mentioning GTA 6 for Xbox on podcasts and the like. Microsoft has the cash to acquire marketing rights for GTA 6, but the smaller install base would lead to a price premium from Take Two. Coupled with the apparent decreased appetite to even sell Xbox Series X|S hardware suggests this possibility is simply unlikely to pass.
GTA 6 could have been a pretty big deal for Xbox Series X|S, but it's probably not on the cards
Microsoft clearly recognizes Grand Theft Auto as a growth vector for its platforms. A few weeks ago, GTA dataminer TezFun2 revealed that Grand Theft Auto is coming to PC Game Pass, based on code strings found in the game's launcher. Microsoft and Grand Theft Auto have partnered up for Xbox Game Pass on a few occasions in the past, and it's likely there Microsoft feels its marketing dollars can deliver the best return on investment.
For Xbox hardware technically in third place, the premium Microsoft has to pay for user acquisition at this point has become profit-prohibitive, which is why you've seen a general slump in marketing and stock across the board for Xbox Series X|S. If the cost of acquiring users outstrips the profits they'll bring in, it's just hard mathematics that preclude Xbox Series X|S from charting new growth at this point in the gen, which has been wholly won by PlayStation.
Still, Microsoft is forging ahead with a new hardware strategy for next-gen, which will likely tie Xbox closer to Windows than ever, reducing costs. There's also rumors of bringing third-party gaming hardware OEMs on board to build Xbox hardware too, leading to more options for consumers, while also effectively outsourcing the marketing effort onto manufacturers. It's the strategy Steam is essentially using right now with its Steam Deck platform, which now includes Lenovo among its hardware partners. And hey, the gen isn't over yet, maybe Microsoft has a few more tricks up its sleeve for the Xbox Series X|S just yet.
In a recent interview, Xbox lead Phil Spencer said he wants Xbox hardware to win on differentiation. With AI gaming features, deeper integration with Windows, a more "open" platform, while casting off the need to be as close to PlayStation as possible, there are plenty of opportunities left for Xbox to deliver.
