Is Microsoft (NASDAQ:MSFT) Abandoning Consoles? Game Showcase Leaves Some Wondering.

If there is any one thing that most can take away from tech giant Microsoft’s (MSFT) recent Xbox Games Showcase event, it was, well, that Microsoft does not have a lot in the tank for the next few months. While some hold out hope for a bigger reveal ahead of the holiday shopping season, for the Game Awards 2025, or for the special 25th anniversary of Xbox even to come with 2026’s arrival, one disquieting prospect nags at the backs of console gamers’ minds everywhere: that Microsoft may be about to abandon the console market.

The idea of it is nothing new. The new Xbox console releases–the Series S and the Series X–clearly favored an all-digital future. The version with a disc slot, the Series X, cost around $100 more than the one without at release, which made the perfect carrot to encourage cash-strapped gamers to go the discless route. Throw in the decline of physical media seen throughout the industry, from games to movies–can you even find a game rental operation any more, outside from GameFly? And what do they offer?–and it started to look like console gaming as we knew it was about to go belly up for good.

The Case For Microsoft’s Exit

Looking at the market in general, it does look like Microsoft is pulling out. A lackluster Xbox Games Showcase, with virtually all of Microsoft’s biggest names and heaviest hitters sitting the show out, does not speak well for Microsoft’s future. The games we did see emerge were third-party titles like Call of Duty 6. Major Microsoft names–Fable, State of Decay and more–were simply out of the picture.

This does not bode well for the centerpiece of Microsoft’s gaming ambitions: Microsoft Game Pass. Game Pass all but depends on a steady flow of big-name titles, and without those titles, the reasons to keep Game Pass fall like a brick into the abyss. And without Game Pass–especially in light of an all-digital discless future–then what is the reason to keep Xbox around at all?

With Microsoft showing off the ROG Ally, that also potentially puts a brick in the future of Microsoft as a gaming platform. With Xbox games becoming portable, then Microsoft no longer needs to make hardware, as the portables can handle the job. So too can PCs, where many Xbox games find themselves ported to to begin with.

While an exact percentage of Xbox games that get ported to PC is not available, mainly due to the definition of the term “ported” as well as several strategy considerations, the end result is that there is not all that much content that hits the Xbox that does not eventually show up on PC.

In fact, the rise of cross-platform availability might indicate that Microsoft is becoming less a hardware platform and more a publisher, placing games on other platforms to begin with. The marketing looks much the same, after all, only this way, Microsoft has no need to make a loss-leading hardware platform before just handing the game off to Sony or to a PC operation.

Just to top it off, the Xbox Series S / Series X is approaching its fifth anniversary with November’s arrival. What developments have we seen of hardware updates for either of these? Nothing concrete as yet, and in fact, some developments that suggested the “next Xbox” would look more like a highly specialized gaming PC, potentially complete with Steam access.

The Case Against

Perhaps the biggest point in favor of Microsoft staying in the field is the word “anniversary.” In fact, it provides an alternate explanation for everything we have seen so far. The lackluster game releases, the lack of any word on future platforms…all of it can be traced to Microsoft holding back for 2026. Why 2026? Simple: November 15, 2026 is the 25th anniversary of Xbox. So all these titles, all these new hardware advances, all of that looks a lot brighter when it comes out as part of “Xbox’s 25th Birthday Extravaganza.”

That is, of course, hypothetical. It could be nothing more than coincidence that all of these things are being held back ahead of what would be Xbox’s 25th birthday. But the fact that that birthday is indeed at hand provides an excellent alternate explanation for everything we have seen.

Two further points help suggest that Microsoft is not planning to cut consoles from its lineup. We know that Microsoft is not exactly impoverished right now, and the Xbox platform still brings in revenue measured in billions of dollars. Further, we also know that Microsoft only concluded the Activision-Blizzard deal in late 2023. Why buy an entire company like that only to pull out of the game market two years later?

This is especially true given that Microsoft spent around $69 billion to make that happen. And this was scarcely the only such acquisition. Microsoft has 33 studios to its credit so far. Several of these were acquired in the last five years. Why do that for a brand you know is doomed?

A Big Cloud of Message Fog

So, right now, we do not really know if Microsoft is planning a new beginning with its Xbox anniversary, or if we are seeing the beginning of the end. There are certainly points in either direction. A rapidly-changing landscape for hardware and software alike is inherently difficult to traverse, and this one seems to be changing a lot more rapidly than most.

Microsoft may have many more years to come in the console gaming market. It may be planning to abandon the field altogether. There may be a third path as a publisher or the like. It will likely be 2026 that tells the full story on that one, however.

Is Microsoft a Buy, Hold or Sell?

Turning to Wall Street, analysts have a Strong Buy consensus rating on MSFT stock based on 31 Buys and five Holds assigned in the past three months, as indicated by the graphic below. After a 7.75% rally in its share price over the past year, the average MSFT price target of $518.77 per share implies 8.02% upside potential.

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