Xbox confirms bruising update in battle against Sony PS5 and unveils limited edition new accessory

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Hours after Microsoft published some of the most devastating sales figures for its Xbox console, it unveiled a limited edition new controller. Priced at £64.99 and scheduled to start shipping on August 13, the Sky Cipher Special Edition controller features a transparent blue design offering a glimpse at the silver interior.

• View Deal | Preorder Sky Cipher wireless controller from Xbox
• View Deal | Preorder Sky Cipher wireless controller from Amazon

The designers at Microsoft have equipped the wireless controller with metallic details across the body too. The launch will herald the arrival of new environmentally-friendly packaging that ditches all single-use plastics and the traditional paper manual — you'll now need to scan a QR code to read a digital version.

Microsoft says the packaging is 22% smaller and 21% lighter too.

• View Deal | Xbox Series X console starts from £31 p/month
• View Deal | Xbox Series S console starts from £21 p/month
• View Deal | Stream every Xbox Studio title on Game Pass, starting from £1
• View Deal | Save £40 on Sony PS5 console on Amazon

Xbox wireless controllers work with the latest consoles from Microsoft, as well as the forthcoming redesigned Xbox consoles, laptops and desktop PCs, not to mention, Android smartphones and tablets, iPhone, iPad, and Apple TV gadgets. You can even pair an Xbox controller with a Meta Quest VR headset to play the latest blockbuster games on a cinema-sized screen inside the visor-like display.

In other words, there are a lot of options when it comes to using your brand-new Xbox controller.

However, the glitzy new launch comes after a bruising new update from Microsoft. The Redmond-based firm revealed that Xbox console sales have continued to decline in recent months — with revenue from gaming hardware dropping by 42%.

That's a bigger drop than the 31% decline reported by Microsoft back in April.

Calculations by Forbes in the wake of the 31% drop in hardware revenue published by Microsoft earlier this year revealed that Sony PlayStation 5 was out-shipping the Xbox Series X and Series S at a ratio close to 5:1. With the additional 11% drop seen in the latest earnings call from Microsoft — that's set to get even worse.

It's worth noting that Microsoft isn't alone. All three of the biggest console manufacturers have seen sales dip this year. The Xbox Series X and Series S will celebrate their fourth anniversary in November, with Microsoft already promising refreshed hardware to renew interest in its latest generation of console. The PS5 originally launched around the same time, although Sony released a slimmer redesign last Christmas. It's also widely believed that a beefier new PS5 Pro will launch in the coming months to capitalise on the GTA5 release date.

Elsewhere, Nintendo has confirmed that it'll unveil a successor to its Nintendo Switch — one of the best-selling consoles of all-time — before April 2025, with tipsters pointing to a Christmas 2025 launch date.

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Microsoft told shareholders that it knows it must do more than just launch new consoles to see growth return to its gaming hardware sales. CEO Satya Nadella told investors that the Xbox team's strategy so far had been to strengthen content for players on Xbox consoles — and now, it wants to delivery those games wherever people want to play. Earlier this summer, Microsoft confirmed that Fire TV Stick owners will be able to play console-quality Xbox games with no extra hardware.

Chief Financial Officer at Microsoft, Amy Hood said: "The real goal here is to take a broad set of content to more users in more places, and build something that looks more like, to us, a software annuity and subscription business with enhanced transactions and the ownership of IP which is quite valuable long-term. We're encouraged by the progress and how we're making progress with Game Pass."

Microsoft recently increased prices for 34 million Game Pass subscribers worldwide — forcing them to pay an additional £24 every year. The price rise impacts new users from today while existing Game Pass subscribers will be given a few weeks' grace, with the increase scheduled to kick in from September.

• Next Call of Duty game will cost £1 for Xbox players, but PS5 owners forced to pay full price

The Xbox price rises, which impact subscribers to the Netflix-like service around the world, are as follows...

• Game Pass Ultimate — monthly plan increases from £12.99 to £14.99
• PC Game Pass — monthly plan increases from £7.99 to £9.99
• Game Pass Core — annual plan increases from £49.99 to £55.99

It comes as Microsoft confirmed one of the biggest-selling franchises on the planet, Call of Duty, will be coming to Game Pass in the coming months. The next entry in the series, Call of Duty: Black Ops 6, will be included in the catalogue of games to download or stream for subscribers the moment it's released in stores worldwide.

Before its acquisition by Microsoft, game developer Activision would sell copies of each new Call of Duty instalment for £69.99, shifting around 20 million copies on average each year. Those who don't hold a Game Pass subscription — as well as those on rival platforms, like the PlayStation 5 — will need to pay for a standalone copy of the forthcoming game.

Starting from just £1 for the first fortnight, Xbox Game Pass Ultimate is a Netflix-like subscription that offers access to a rotating catalogue of console and PC games from Microsoft's in-house studios, which now includes Bethesda and Activision Blizzard, as well as other popular developers, like EA.

Games can be downloaded to consoles or PCs and played locally without an internet connection. In-game progress will be synched over the cloud, so you'll also be able to resume on another device, like a smartphone, iPad, Samsung Smart TV, Fire TV Stick 4K Max, or handheld games console, like the Logitech G Cloud or Asus ROG Ally.

Xbox has even integrated features like voice chat into its cloud offering, so the experience in your web browser and across different devices should be very close to playing on a traditional game console.

It's already proven to be a pretty tumultuous time for Xbox.

Out of the blue, Microsoft shut multiple gaming studios from its portfolio in May as part of cost-cutting measures following its $68.7 billion acquisition of Activision Blizzard King — the company behind hits like Call of Duty, World of Warcraft, and Candy Crush — and its almost 10,000 employees.

Xbox has not revealed the number of employees impacted by its most recent round of layoffs. Growth in personal computing and console gaming is expected to remain below pre-pandemic levels as gamers record fewer hours of playtime owing to weaker release schedules, data from research firm Newzoo showed.

The "reprioritization of titles and resources" is so that Xbox can invest deeply into its portfolio of games and new intellectual property, according to Xbox exec Matt Booty. All the affected studios are units of ZeniMax Media, which was acquired by Microsoft for $7.5 billion in 2021, and Bethesda.

Microsoft previously laid off 1,900 employees at Activision and Xbox at the start of the year.

Earlier this month, Microsoft held its annual Xbox Games Showcase, where it unveiled new all-digital consoles and trailers for games including the new Call of Duty title as it looks to spark consumer enthusiasm amid broader spending weakness in the industry.

First up, Microsoft has announced a new Xbox Series S with 1TB of internal storage — twice as much as the original console.

Everything from the standard Series S remains unchanged, including the "Robot White" finish, colour-matched wireless controller, and all-digital set-up for watching movies and playing games.

With Call of Duty: Modern Warfare III alone occupying 200GB of storage space, Microsoft addressed the lack of storage on its Xbox Series S with the introduction of the Carbon Black colourway in September last year, which also arrived with a 1TB SSD.

With the latest shake-up to the line-up, you'll now be able to choose between Carbon Black and Robot White and still enjoy more storage capacity for your games, movies, and apps.

Microsoft has ditched the disc drive from its flagship Xbox Series X with a new All-Digital variant of the console that comes in the Series S's trademark "Robot White" colour for the first time.

Aside from the new colourway and the missing Blu-ray and game slot, there's no difference between this Series X and the previous model.

Finally, an all-new Xbox Series X Galaxy Black Special Edition will be available to buy later this year. It comes equipped with the biggest SSD we've ever seen in an Xbox and a new interstellar-themed paint job.

Describing the all-singing, all-dancing new console, Roanne Sones, Head of Xbox Devices penned in a company blog post: "Experience the fastest, most powerful Xbox, now with a 2TB SSD. This new special edition Xbox Series X delivers the same speed, performance and features of Xbox Series X, but with twice the storage and a unique design.

"Drawing inspiration from constellations and the spirit of exploration and adventure that outer space evokes, the special edition console in Galaxy Black features a silver, grey, and green celestial effect representing thousands of games and millions of gamers playing on Xbox.

"Hold on to the action with a matching Xbox Wireless Controller, featuring a Galaxy Black D-pad and Velocity Green back case, only available with this special edition console."

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The flagship Xbox Series X will cost $599.99 in the United States and €649.99 in Europe, with no UK price confirmed. Given that the standard 1TB-equipped Series X costs £479.99, we'd expect this to be closer to £579.

As well as the new hardware, the Xbox Games Showcase also saw a slew of new titles confirmed for the console, including Doom: The Dark Ages, the latest instalment in the long-running Doom franchise, as well as a very early look at the newest Gears of War title, ending a five-year wait for one of Xbox's most popular properties.

Almost all of the games announced, including the new Doom, Indiana Jones And The Great Circle, South Of Midnight, Perfect Dark, and Call of Duty, will all be available on Xbox Game Pass on the day of launch, indicating that Microsoft is making big bets on the subscription service as it tries to woo consumers grappling with a relatively softer economy.