2025 hasn't been the easiest year for the gaming and IT industries overall, but for Microsoft, it's been especially controversial. The company stands out not only by a series of questionable decisions, but also, in fact, by admitting its own defeat in the console race. PC Gamer Portal speakWhy 2025 will be a disastrous year for Microsoft.
Xbox and mass layoffs
In 2025, Microsoft's gaming division closed many studios, canceled many sizable projects and put thousands of employees out of work… Even though they had previously spent five years on an ambitious merger of some of the largest game studios and publishers under the Xbox umbrella. Perfect Dark was canceled, as was Everwild, the shooter from John Romero's studio almost went under the knife – but, according to him, it was saved. A certain ZeniMax MMO, which was said to have attracted Xbox's top management, including Phil Spencer, was also shut down. However, this didn't stop Spencer from claiming on the internal mailing list that Xbox's growth prospects were as good as ever.
End of support for Windows 10
The system requirements of Windows 11 four years ago seemed so restrictive that it would probably be in Microsoft's best interest to revise them. But this did not happen. Anyone who installs Windows 11 on a computer that doesn't meet the system requirements will receive a notification that they are not guaranteed stable updates.
Support for Windows 10 has ended, even though according to ZDNet estimates, the operating system is used by about a third of the world's computers – or 400 million users. Furthermore, most of these systems cannot be updated, even if their owners wanted to. Extended patch support is a perk available only to Microsoft business customers and costs some money.
Integrate AI everywhere
Microsoft suffered an AI setback last year when the public and internet security experts pointed out that its AI Revocation feature was a privacy nightmare. But now Copilot is everywhere, and Microsoft's CEO said, rather amusingly, that he supposedly feels more comfortable reading a neural network transcription of a podcast than listening to real people. It's ironic that Microsoft's head of AI doesn't understand why people don't like AI.
Xbox Series X has finally surrendered in the console race
For Xbox Series X, Microsoft's current-generation platform, 2025 also turned out to be a disastrous year. Due to trade tariffs, the price of the console increased to $650 – $100 more than the PS5, which outsold the Xbox 3:1. Xbox Series consoles are selling so poorly that one of America's biggest retailers has stopped restocking them, and Halo is officially coming to PlayStation.
Game Pass remains unprofitable
Arkane founder and former director Raphael Colantonio called Game Pass “an unsustainable model that has been increasingly damaging the industry for 10 years.” And former Bethesda and Microsoft executives Pete Hines and Shannon Loftis said the platform creates “an ecosystem that does not value or reward” developers, while also creating “internal tensions” when developing first-party projects.
Buying Call of Duty doesn't help Game Pass reach its goal of 100 million users – the company is still about 40 million short. And the authors of Black Ops 6 in turn reported that the release of the game on Game Pass led to a loss of about $ 300 million due to lack of sales.
This is Xbox and a failed marketing effort
Xbox clearly got off to a rocky start with the launch of its own portable console, launching its This is Xbox promotional campaign in late 2024. From now on, Xbox is no longer so much a platform as a way to access Game Pass and cloud streaming. But the failure of ROG Xbox Ally, combined with the skepticism surrounding Microsoft's decisions, only underscores the irrelevance of the Xbox brand.
Furthermore, despite the vast resources that can be spent optimizing Windows for mobile gaming, new portable Xbox devices are losing out to the Steam Deck on almost every front. By comparison, Microsoft employs 220,000 people, while Valve only employs 500 people.
Boycott based on Israel and Palestine
Perhaps the biggest scandal involving Microsoft has to do with the Palestinian-Israeli conflict. In January, The Guardian reported that the group had “strengthened its relationship with Israel's defense complex” in the form of the supply of computer equipment and an exclusive technical support agreement. Microsoft publicly ignored the topic until two company employees protested on the occasion of the brand's 50th anniversary.
Amid public outcry, Microsoft “conducted an internal investigation” and of course found no problems. The results only led to more criticism of the company, and in September, Microsoft blocked the Israeli armed forces from accessing “specific AI and cloud storage technology” to ensure that “the company's services are not used for mass surveillance of civilians.”
