September marked a concerning low point for Xbox hardware sales, with a 27% year-over-year decline, reaching an all-time low for the month according to new Circana data. This dip occurred during a period of overall growth in video game spending, highlighting a widening market gap with Sony's PlayStation.
In contrast, PlayStation 5 sales saw a robust increase, with unit sales growing by 22% and dollar sales by 43% compared to the previous year. This surge comes despite a higher average selling price for the PS5 compared to a year ago, and reportedly strong demand for the anticipated PS5 Pro model, potentially driven by the upcoming launch of Grand Theft Auto 6. Sony's consistent marketing strategy for the PS5, including its upcoming all-digital transition in 2028, appears to resonate with consumers.
The Nintendo Switch 2 also demonstrated resilience, with sales falling by 12% year-on-year but still outperforming the original Switch console. Launched in June 2025, the Switch 2 has become Nintendo's fastest-selling system, though its initial sales momentum has begun to moderate.
Xbox's significant hardware downturn is attributed to a confluence of strategic decisions. Microsoft's increasing emphasis on a multiplatform approach for its first-party titles, a strong focus on cloud gaming, and a departure from the traditional console-centric model, as suggested by past "This Is An Xbox" advertising campaigns, have collectively contributed to the declining console sales trajectory. The brand's pivot towards making its games accessible across various devices has seemingly diminished the necessity of owning an Xbox console for many players.
Under new Xbox CEO Asha Sharma, Microsoft is reportedly aiming to reverse this trend. Recent efforts include a renewed focus on console exclusives, a de-emphasis on the broad multiplatform strategy, and plans for console upgrades and new hardware codenamed Project Helix. These initiatives represent a significant strategic reset for the Xbox division as it seeks to regain market share and console relevance, even as the company undergoes broader business adjustments, including recent layoffs.