The gaming industry is undergoing significant shifts in 2025, prompting developers to reassess the value of investing in Xbox game development. With declining console sales, evolving platform preferences, and changing consumer behaviours, the question arises:
Should developers continue to prioritise Xbox?
Developers Turn to Where Demand Grows
As uncertainty looms over traditional console development, particularly for Xbox, some studios are setting their sights on the growing demand within the iGaming industry. The appeal is clear as it means lower development costs, quicker turnaround times, and significantly higher monetisation potential in global markets.
The iGaming sector in the UK saw strong growth, with the Gambling Commission reporting a gross gambling yield of £6.5 billion for online gambling in the 2022–2023 fiscal year. It’s a tempting figure for indie and mid-tier developers. Another reason iGaming exploded is that players can access a variety of low-development but high-engagement game variations, like various baccarat formats from the mobile-friendly TG.Casino, where they can also enjoy fast payouts, flexible transaction methods, and generous bonuses like welcome rewards, free spins, and cashback offers.
Here are more reasons for the development shift:
- Consistent revenue streams through microtransactions and loyalty schemes.
- High player engagement with daily active users often exceeds console averages.
- Global accessibility, requiring no reliance on physical hardware sales.
Several smaller UK-based devs, previously focused on Xbox indie titles, are now producing HTML5-based games, virtual slots, and live dealer casino experiences. While not as creatively fulfilling for some, the financial upside often outweighs artistic compromise, especially for studios looking to survive in a harsh post-pandemic landscape.
A Declining Trend in Xbox Console Sales
Recent data indicates a concerning decline in Xbox console sales. In 2024, Xbox sold approximately 2.7 million units in the US and a mere 290,000 units in Europe, marking its worst performance in history. This represents a significant drop from the previous year, highlighting a downward trajectory that shows no signs of reversing in 2025.
The sale of Xbox Series X and S has dropped 48% in Europe in 2024 compared to the previous year. Indeed, PlayStation and Nintendo saw some declines, but not nearly in the region of Xbox hardware sales drops. Such figures raise concerns about the platform’s viability and its ability to attract and retain both developers and players.
Developer Preferences: Shifting Towards PlayStation and PC
The declining hardware sales have influenced developer decisions. Discussions revealed that some publishers question the value of supporting Xbox due to poor sales performance at the 2024 Game Developers Conference, especially in Europe. One publisher noted, “I don’t know why we bothered supporting it,” reflecting a sentiment that is quickly drying up.
Furthermore, Microsoft’s research indicates that developers prefer launching games on PlayStation over Xbox. Factors contributing to this preference include better sales performance and a more robust user base on PlayStation platforms.
The Game Pass Factor: A Double-Edged Sword
Xbox Game Pass offers players access to a vast library of games for a monthly fee. The gaming platform even offers Game Pass deals like 90% off the Pac-Man Mega Tunnel Battle: Chomp Champs, but it’s not enough. The subscription model had unintended consequences for developers, with some reporting decreased individual game sales.
Players are less inclined to purchase titles outright. This shift in consumer behaviour creates a challenging environment for developers who rely on direct sales revenue. The financial viability of releasing games on Xbox becomes questionable for many studios without a Game Pass deal.
Microsoft’s Multi-Platform Strategy: Broadening Horizons
In response to these challenges, Microsoft has adopted a multiplatform approach, releasing previously exclusive titles on PlayStation and Nintendo consoles. For instance, Microsoft became the top video game publisher globally in December 2024, with 64% of its sales occurring on PlayStation gamers.
This strategy reflects a shift in focus from hardware sales to software and service revenue. By expanding the availability of its games, Microsoft aims to reach a broader audience, acknowledging that the traditional console-exclusive model may no longer be sustainable.
Developers Weigh the Pros and Cons
Given the current landscape, developers must carefully assess the benefits and drawbacks of developing for Xbox. Game development has not become entirely stagnant, with 15 new Xbox games due to release in May this year, but developers have started focusing elsewhere. Here are the pros and cons to consider when developing Xbox games:
Pros:
- Access to Game Pass’s extensive user base.
- Potential for increased visibility through Microsoft.
- Support for cross-platform and cloud gaming initiatives.
Cons:
- Declining console sales are impacting potential reach.
- Reduced direct sales due to the subscription model.
- Increased development costs for ensuring compatibility.
Ultimately, the decision to develop for Xbox hinges on a studio’s specific goals, resources, and target audience. While Microsoft’s evolving strategy offers new opportunities, it also presents developer challenges.
