Microsoft Admits Xbox Has “Lost The Console Wars”, Reveals Hardware “Has Consistently Ranked Third Behind PlayStation And Nintendo In Sales”
Much to the dismay of investors and dedicated fans alike, Microsoft has not only revealed that the Xbox hardware never been able to gain a foothold on its competitors, but also admitted that this lack of success has effectively resulted in the company having “lost the console wars”.
This information was first made public courtesy Microsoft court filing meant to rebuff the Federal Trade Commission’s ongoing efforts to block their purchase of Activision Blizzard over cloud-gaming advantage concerns.
Hoping to portray themselves a relative industry underdog ahead of their June 22nd appearance before the US Northern District Court, Microsoft outright asserted that “Xbox has lost the consoles wars, and its rivals are positioned to continue to dominate, including by leveraging exclusive content.”
“In 2001, Microsoft entered the gaming industry with the launch of its first Xbox video game console, in competition with the established incumbents Sony and Nintendo,” wrote the company’s legal team, per a copy of the filing obtained by The Verge Senior Editor Tom Warren. “In that ‘generation’, Sony and Nintendo outsold Xbox by a significant margin.”
“With every succeeding generation over the twenty years since, Sony, Nintendo, and Xbox have remained the three major console producers, and have been engaged in what the industry refers to as the ‘console wars’,” they continued.
Microsoft says Xbox has "lost the console wars." Ahead of the FTC case today, Microsoft is keen to show Xbox is in third place. Microsoft reveals Xbox had 16 percent share of console sales in 2021 and 21 percent of the console install base https://t.co/4PrN7uQwvS pic.twitter.com/KKyQcTXZqp
— Tom Warren (@tomwarren) June 22, 2023
Turning to arguably their primary rival, Microsoft then argued, “Sony is the dominant player in consoles.”
“Sony PlayStation, for over two decades and through five generations, has been the leading console both worldwide and in the U.S.,” the company explained. “Sony’s gamer base is [REDACTED] as large as Xbox’s worldwide, and [REDACTED] larder in the United States.”
“Xbox’s console has consistently ranked third (of three) behind PlayStation and Nintendo in sales,” said Microsoft. “In 2021, Xbox had a share of 16% while Nintendo and PlayStation had shares of [REDACTED] and [REDACTED], respectively. Likewise for console revenues and share of consoles currently in use by gamers, Xbox trails with 21% while PlayStation and Nintendo have shares of [REDACTED] and [REDACTED], respectively.”
As such, per an added bit of the filing recounted by Kotaku, Microsoft ultimately declared, “Having lost the console wars, Xbox is betting on a different strategy than Sony.”
“Xbox generates profits through game sales, not console sales,” the company asserted in favor of their purchase of the Call of Duty and Diablo developer. “That is because Xbox sells its consoles at a loss, effectively subsidizing gamers’ purchase of the hardware in hopes of making up the [lost] revenue through sales of games and accessories.”
Whether or not this argument will have any sway on the Court remains to be seen, but given that they have not redrawn their complaint, at least the FTC remains unconvinced
Kicking off on June 22nd, the trial proceedings related to Microsoft and the FTC’s ongoing battle over the fate of Activision Blizzard are expected to run through the week of the 26th.
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