Microsoft Confirms Xbox Next-Gen Console Development, Denies Cancellation Rumors

Microsoft has officially denied reports claiming it plans to cancel its next-generation Xbox console, reaffirming that development on new first-party hardware is still underway. The company issued a statement on October 5, 2025, following widespread speculation over the weekend suggesting that Xbox might be discontinuing its console lineup in favor of a full transition to cloud gaming.

The rumors began on October 4, when NeoGAF user SneakersSO, who has a history of providing Microsoft insider information, posted a message to the NeoGAF forums sharing alleged internal details about the company’s next hardware plans. In the post, SneakersSO claimed that “the announcement of Call of Duty on Xbox Game Pass cost the company millions of dollars and has put the next-gen console plans ‘up in the air.’” The user further alleged that “some staff members were told that the next-gen console would need to be ready as early as 2026,” and added that “Xbox will be focusing more on software in the future.”

The following day, October 5, Microsoft issued an official statement to multiple outlets, including Windows Central, addressing the rumors directly. The company said: “We are actively investing in our future first-party consoles and devices designed, engineered and built by Xbox. For more details, the community can revisit our agreement announcement with AMD.”

This statement reaffirmed Microsoft’s continued investment in physical console hardware and directly countered speculation that the company was pivoting entirely to cloud gaming. The reference to AMD pointed back to a previously announced multi-year partnership between the two companies, first detailed in June 2025. That partnership was described as a “strategic, multi-year” agreement covering “a portfolio of devices, including our next-generation Xbox consoles.” Under the deal, AMD would provide custom silicon designed to power upcoming Xbox devices, supporting improvements in visuals and graphics performance.

In that June announcement, Xbox president Sarah Bond explained the company’s broader hardware strategy, saying, “At Xbox, our vision is for you to play the games you want, with the people you want, anywhere you want. That’s why we’re investing in our next-generation hardware lineup, across console, handheld, PC, cloud, and accessories.”

The announcement also confirmed that the ROG Xbox Ally, powered by AMD Ryzen Z2 A processors, was the first device to emerge from the AMD partnership. The ROG Ally X is scheduled for release on October 16, 2025, priced at $999.

The rumors surrounding Xbox’s next console followed a series of developments that unsettled some members of the Xbox community. On October 1, Microsoft announced an increase in pricing for its Xbox Game Pass subscription service. The Game Pass Ultimate Edition rose by 50 percent, from $19.99 to $29.99 per month, offering access to day-one releases and online multiplayer. Following the announcement, the Xbox website experienced heavy traffic as users attempted to cancel their subscriptions, causing temporary outages. Shortly afterward, Xbox players began reporting new Game Pass advertisements appearing on their home screens.

The pricing changes came shortly after earlier increases for the Xbox Series X and Series S consoles, along with rising hardware costs across the Xbox ecosystem. The developments led fans to question whether the company was preparing to shift focus away from traditional console production.

Adding to the speculation, Costco confirmed it had removed Xbox consoles from its physical stores and online listings. The company stated that the move was “a business decision” and that it would no longer carry Xbox consoles going forward. SneakersSO also claimed that Costco could be “the first of other possible stores that may remove the current Xbox consoles from shelves.”

Meanwhile, Windows Central reported that Microsoft’s partnership with AMD remains ongoing and that the collaboration is central to the next generation of Xbox hardware. The report indicated that the partnership involves “custom AMD silicon designed to power upcoming Xbox devices” and substantial performance improvements for future consoles.

Microsoft’s October 5 statement followed multiple unverified reports that the company’s hardware division had been “phased out” and that potential layoffs might occur in early 2026. However, Microsoft explicitly rejected claims that it was exiting the console business and its continued commitment to console development and first-party hardware. 

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