Gaming
Consoles Hit Historic Lows While Players Kept Buying the Games Themselves
The games business spent this week arguing about everything except the games. Xbox reorganized itself into an entertainment company, American console sales sank to historic lows, physical game spending grew for the first time in a decade, and Nintendo planted its flag for the disc and the cartridge. The hardware and the software are telling opposite stories, and the industry's future is being decided in the gap between them.
The boldest move came from Xbox, which launched XP, a new division for film, television, consumer products, and live events, led by former Mojang head Kayleen Walters as president. Chief strategy officer Matthew Ball announced the unit in a blog post, framing it as central to Xbox's ambition to become the number one entertainment company in the world. XP splits into four businesses. Xbox Pictures for movies and TV, Xbox Products for licensing and merchandise, Xbox Places for events and attractions, and Xbox Partnerships for brand collaborations. The logic is visible in the numbers. A Minecraft Movie grossed more than 960 million dollars worldwide, Minecraft sales grew past 425 million units during Walters's tenure, and its merchandise business ranks among the world's 20 largest. Maria Angelidou-Smith, previously Reddit's chief product officer, takes over as Mojang's CEO on October 19. The reorganization lands inside a larger reset, with Microsoft cutting about 3,200 gaming jobs across fiscal 2027, and the message reads clearly. Xbox's future growth sits in worlds that live beyond the console.
The console itself had a bruising week in the data. Circana's US retail tracking through August shows Xbox hardware sales down 33 percent year over year, an all time low, with PlayStation down 25 percent, its weakest showing since 2013. Analyst Mat Piscatella called it the most precarious position for US hardware since the early 1980s. The cause is printed on the price tags. The average Xbox sold this year went for 529 dollars, up 26 percent, and the average PlayStation for 597 dollars, up 20 percent, both all time US highs. The component shortages behind the hikes trace largely to AI data centers buying up memory and chips, with tariffs adding pressure, and the result breaks the industry's oldest pattern. Consoles are supposed to get cheaper with age so the install base can grow late in the cycle, and this generation keeps doing the opposite. The hoped for catalyst is Grand Theft Auto 6, launching in November on PlayStation and Xbox with the PC version arriving later, but asking players to spend 600 to 800 dollars on hardware to play one game is a tall order, and next generation pricing faces an uncomfortable question about whether it starts above 1,000 dollars.
Here is the twist. While hardware slumped, physical games grew. Circana data shared by Piscatella shows US spending on new physical games rose 5 percent to 738 million dollars in 2026, the first increase in ten years. Game Key Cards on the Switch 2 surged 631 percent as the release count jumped from ten titles to 64, while every other physical format declined 3 percent. Piscatella credits the Switch 2's larger selection, and Nintendo is leaning into the signal. Nintendo of Latin America vice president Bill van Zyll said at Brazil Game Show 2026 that the company plans to keep physical media, telling interviewer Rodrigo Coelho that Nintendo stays agnostic and follows what consumers prefer. The contrast with rivals is sharp. Sony confirmed plans to cease PlayStation disc production in early 2028, with Microsoft expected to follow, which makes Nintendo's stance the industry's clearest defense of ownership.
Put the pieces together and a pattern emerges. The console as a box is struggling under prices the market keeps rejecting, while the things players actually own, the discs, the cartridges, the franchises themselves, are where the industry is investing. Xbox wants to be an entertainment company, Nintendo wants to keep the shelf alive, and the sales data says players still open their wallets when they get something they can hold. For readers, the takeaway is refreshingly tangible. Buy the games, own the games, and let the platforms compete for the privilege of running them.
Quick answers
What is this story about?
The games business spent this week arguing about everything except the games. Xbox reorganized itself into an entertainment company, American console sales sank to historic lows, physical game spending grew for the first time in a decade, and Nintendo planted its flag for the disc and the cartridge. The hardware and the software are telling opposite stories, and the industry's future is being decided in the gap between them.
Why does this story matter?
Put the pieces together and a pattern emerges. The console as a box is struggling under prices the market keeps rejecting, while the things players actually own, the discs, the cartridges, the franchises themselves, are where the industry is investing. Xbox wants to be an entertainment company, Nintendo wants to keep the shelf alive, and the sales data says players still open their wallets when they get something they can hold. For readers, the takeaway is refreshingly tangible. Buy the games, own the games, and let the platforms compete for the privilege of running them.
Sources
- theGeek.games: Xbox creates XP division for movies, theme parks, and more
- Video Games Chronicle: US console hardware at most precarious since the 80s
- Notebookcheck: physical games comeback after 10 years
- Nintendo Life: Nintendo states no plans to ditch physical media
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