It’s going to make a bad time for the gaming industry even worse if Xbox can’t pull off a win.<\/b>
\nXbox is in freefall, but Microsoft\u2019s gaming platform could redeem itself as soon as next year. During AMD\u2019s Q4 2025 earnings call on Tuesday, the chipmaker\u2019s CEO, Lisa Su, said that \u201cdevelopment of Microsoft\u2019s next-gen Xbox featuring an AMD semi-custom SoC is progressing well to support a launch in 2027.\u201d
Up until now, Xbox President Sarah Bond had only been ready to tell us the next Xbox console was indeed in development and would deliver a \u201cpremium experience.\u201d The console likely won\u2019t conform to any one game launcher. Instead, it could allow players to access platforms like Steam, Epic Games Store, and GOG as well as Xbox. Essentially, it will be a PC with a less-upgradable \u201csemi-custom\u201d AMD SoC (system on a chip).
Why is AMD talking about this console even before Xbox can start its next-gen media blitz? Likely because gaming hardware will be in the doldrums all throughout 2026. Su said the company expects a \u201cdecline by a significant double-digit percentage as we enter the seventh year of what has been a very strong console cycle.\u201d 2026 may be an odd year for gaming hardware
The year will start off with the launch of Valve\u2019s long-awaited Steam Machine. Su said the device will arrive early this year, confirming what Valve had already indicated to Gizmodo and others about release timing.
Valve\u2019s PC\/console hybrid will sport another \u201csemi-custom\u201d AMD chip, though in this case it will be based on older GPU microarchitecture, namely RDNA 3.5. Valve has claimed it will be powerful enough for 4K gaming with the help of upscaling, though judging purely by specs, it may not be as powerful as graphics-obsessed gamers may demand. Later this year, we may see new handheld gaming PCs sporting an Intel Panther Lake chip, but that may be it for new gaming hardware.
The difficulty will be getting gamers excited for new gaming hardware, especially if it costs anything more than the current generation of consoles. More than five years after launch, the PlayStation 5 and Xbox Series X cost more, not less, due to last year\u2019s tariffs. A gaming-ready PC is now enormously expensive due to the ongoing memory shortage. We still don\u2019t know the price of the Steam Machine, but based on Valve\u2019s statements to this point, it likely won\u2019t be cheap.
The next-gen Xbox may be even costlier. Numerous leaks from reliable sources like Moore\u2019s Law is Dead on YouTube suggest that Microsoft\u2019s PC-like console will use AMD\u2019s newfangled RDNA 5 microarchitecture. The specs we\u2019ve seen from leaks\u2014including GPU core counts\u2014support that this could indeed be a powerful machine for playing games at 4K with ray tracing enabled. The industry may be even worse off without Xbox
Specs are one thing, but next-gen hardware success will depend on whether Microsoft can give gamers a real reason to care. If consoles become a \u201cpremium\u201d device built only for the most-dedicated gamers with deep pockets, it will price out many more potential players. Judging by Xbox\u2019s reported slowdown in hardware and services revenue, just because they can\u2019t afford a new console doesn\u2019t mean players will run out to buy an increasingly expensive Game Pass subscription. Xbox needs to offer gamers a whole new way to play, something that re-energizes Xbox as a lifestyle brand, rather than just another manufacturer of gaming hardware.
The gaming industry needs a win. A total of 33% of U.S.-based game developers who responded to the annual State of the Games Industry Report said they were laid off in the last two years. Many of those were due to Microsoft\u2019s own cuts. Among its many in-house and partnered studios, Microsoft is responsible for major developers from Blizzard to Bethesda down to former indie darlings like Double Fine and Obsidian. Xbox\u2019s slow demise will make a bad time for the gaming industry worse.<\/p>\n