Microsoft Admits 'Xbox Has Lost The Console Wars' During FTC Court Hearing

In a court document submitted during the Federal Trade Commission's (FTC) hearing regarding Microsoft Corp.'s MSFT $68.7 billion acquisition of Activision Blizzard Inc ATVI, the Xbox manufacturer admitted that it has lost the video game wars against rivals Sony Group Corp. SONY and Nintendo Company Ltd NTDOY.

"Xbox has lost the console wars, and its rivals are positioned to continue to dominate, including by leveraging exclusive content," Microsoft wrote in a document submitted on June 22.

"Xbox’s console has consistently ranked third (of three) behind PlayStation and Nintendo in sales," it added. "In 2021, Xbox had a share of 16 percent while Nintendo and PlayStation had shares of [redacted] and [redacted], respectively. Likewise for console revenues and share of consoles currently in use by gamers (‘installed base’), Xbox trails with 21 percent while PlayStation and Nintendo have shares of [redacted] and [redacted], respectively."

According to Kotaku, Microsoft's latest consoles — Xbox Series X and Xbox Series S — have sold 21 million units as of April 2023, while the PlayStation 5 and Nintendo Switch have sold approximately 36 million units each.

As a result, Microsoft has shifted its focus to delivering software and expanding its Game Pass subscription service, rather than competing for dominance in the console market.

Regarding this matter, the tech giant acknowledged: "Having lost the console wars, Xbox is betting on a different strategy than Sony [and Nintendo]. Xbox generates profits through game sales, not console sales. 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."

Image by Marko Deichmann from Pixabay

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