Since October 2015, Microsoft has refused to release data regarding the sales of the Xbox One. They took this curious action despite console sales numbers being the traditional metric for success in the gaming industry. New sales data regarding the Xbox Live subscription service suggests a reason why Microsoft has been so tight-lipped about their sales numbers - they are losing the console wars badly.
The three major gaming companies - Microsoft, Sony and Nintendo - have each adhered to a different core philosophy when it comes to console development. Microsoft has focused on processing power, with their series of Xbox consoles traditionally having the most powerful hardware of each generation of consoles. Sony, by contrast, has focused on exclusivity, securing sole publication rights to various popular franchises such as God of War (which is actually developed internally) and the upcoming Spider-Man game. Nintendo carved out a niche for itself focusing on innovation and gimmicks, as well as their own popular family friendly franchises.
Each company has done well in their respective arenas, but a report from Variety suggests that having the most powerful CPU may not be enough for those gamers who were previously Xbox loyalists. The key lies in a Microsoft statement regarding increased subscriptions to their Xbox Live service.
"We are continuing to look at engagement as our key metric for success and are no longer reporting on total console sales. During Microsoft’s FY18 Q3 earnings, we announced that gaming revenue grew 18% year-over-year, driven by Xbox software and services revenue growth of 24%, and Xbox Live monthly active users grew 1% year-over-year to 59 million."
While 59 million subscribers is nothing to sneeze at, and a definite improvement over the 48 million subscribers the service reported in 2016, it is still far below the 79 million PlayStation 4 units Sony has sold since 2014, though it's worth pointing out that the number of units sold does not necessarily equate to number of online users. Plus, multiple people could be using the same Xbox Live account as a byproduct of Xbox's Home option. This also ignores the fact that those subscription numbers almost certainly include several million users of the Xbox 360 - Microsoft's previous console - which is estimated to have sold 84 million total units since 2005.
Ironically, it may have been their focus on utilizing the most modern technology possible that placed Microsoft in their current bind where the Xbox One is concerned. When the system specifications were originally announced, it was said that the Xbox One would require a continual high-speed Internet connection in order to function (a tall order for many rural gamers) and there would be no offline mode. This drove many gamers to the PlayStation 4, and they didn't come back even after the Xbox One was changed.
Strangely enough, this has led to speculation that the next generation Microsoft gaming experience may involving utilizing existing technology to stream games directly to televisions without the need for a console. This seems unlikely, given that Microsoft has already presented the next generation Xbox - the Xbox One X - at least year's E3 convention and is already totting the technological superiority of the systems' hardware. In either event, it seems the Xbox One's days are numbered.