It has been claimed by a reliable insider that Microsoft is planning some intense changes for the Xbox brand in the coming months. First, it has been suggested that there will be a massive round of layoffs heading into Q1 2026 (which is hardly a leap), and that the once concrete plans for the next console generation are now ‘up in the air’ and might never materialize.
The claims go on to suggest that the future of Xbox is in games publishing and not hardware, with the brand focusing on the top-performing IPs within its portfolio and no longer worrying about manufacturing traditional consoles.
UPDATE: Microsoft has addressed the rumors about future Xbox consoles.
Before diving in, it should be stressed that this is a pinch of salt discussion, but the insider was given gas by The Verge’s Tom Warren during the most recent episode of the XboxEra Podcast, suggesting the source ‘knows a lot of what goes on internally.’
Is The Next Xbox In Critical Condition Right Now?
In a post that surfaced on NeoGAF, SneakersSO, an insider who successfully tipped and hinted at the Xbox shift towards third-party publishing and plans to replace staff with AI tools at Microsoft, dropped a huge rumor regarding the future of Xbox hardware.
They wrote:
Without going into too much detail, not long after the last round of layoffs (next one should be coming in Q1 26 btw – and its going to be just as massive as the last one), some rumblings out of Xbox starting coming out that were a little hard to believe.
The ramifications of the CoD GP gambit not working out were just starting to get properly measured, but the thing that really stuck out to me was that suddenly, really concrete plans for actual MS Xbox HW went from being definitive, to up in the air, which was really startling given that this thing was meant to be out relatively soon. It was one of those situations where, despite folks being told ‘hey, we wanna pull the trigger on this in 2026’, the steps you would need to take in the lead up to delivering a new console gen weren’t being met. Lots of things that were ‘sure things’ started getting pushed. The Costco retailer pulling Xbox, and apparently they are one of many that we’ll learn about soon, told me all I needed to know.
To sum it up: the future of Xbox is software publishing, with a significantly honed-in focus on profitable IPs (CoD, WoW, Minecraft, Candy Crush, Forza Horizon), Cloud gaming being the home of the ‘Xbox platform’, transititioning GamePass into basically becoming the point of entry subscription for xCloud access (which will continue to drive its price tag higher btw, they aren’t done there just yet either), and releasing their software on any device that has a marketplace and users willing to buy their titles.
Maybe some OEM thing will take up the Xbox name, but given what is clearly a collapse in favorable mindshare and faith in said brand, i’m not even sure a 3rd party OEM is gonna want to have an Xbox console by the time MS is done with their reorienting of the division.
While the incoming layoffs might be inevitable at this point, the more interesting points that SneakersSO talks about refer to the decline of the next generation of Xbox hardware. It has long been rumored and suggested that Microsoft will pull out of manufacturing traditional consoles, as after all, everything can now be an Xbox.
Following the recent Game Pass scandal that saw a massive price hike piss off players worldwide, Microsoft finds itself in a fragile spot with the Xbox brand. As SpeakersSO points out, Costco no longer sells Xbox consoles, and it has been suggested that more retailers are preparing to drop the hardware.
The summing up of SneakersSO’s statement is something that should concern Xbox fans everywhere, as it suggests that more price hikes are incoming as Microsoft zeroes in on cloud gaming and focuses on the more profitable IPs like Call of Duty, Minecraft, and Forza.
This rumor ends with a little conjecture, with SneakersSO suggesting that even an OEM manufacturer wouldn’t want to take up the Xbox brand, which is what ASUS did recently with the ROG Xbox Ally series.
Again, go away from this with the understanding that this is a rumor, and as such, it shouldn’t be taken as gospel.
Let me know what you think about this rumor on the Insider Gaming Discord server.
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Grant has been gaming for 30+ years and in the industry for 10+. You'll probably find him playing a post-apocalyptic game or an extraction shooter somewhere.
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