Microsoft doesn't care if you buy the next-generation Xbox — and it's a brilliant strategy

The next-generation Xbox console from Microsoft, the Xbox Series X.Microsoft

• This holiday season, both Microsoft and Sony are planning to launch next-generation game consoles: the Xbox Series X and the PlayStation 5, respectively.
• Though the two companies compete directly in the video game business, Microsoft is going in a new direction: Instead of focusing on the new Xbox console as a replacement for the current one, Microsoft has spent the last several years turning "Xbox" into a digital ecosystem.
• Whether you're playing on Xbox 360, Xbox One, Xbox Series X, on computer or a smartphone, Microsoft has created a digital game library that works across everything.
• Microsoft of course wants people to buy its new Xbox console, but the primary focus of Xbox now is being a digital platform. Instead of depdending on people to buy Xbox hardware, Microsoft has massively diversified Xbox revenue streams — a brilliant strategy that fundamentally changes its fight with Sony's PlayStation.
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This holiday season, both Sony and Microsoft plan to launch new, so-called next-generation versions of the PlayStation and the Xbox.

Goodbye, PlayStation 4 and Xbox One! Hello, PlayStation 5 and Xbox Series X!

It marks the fourth game console "generation" that Microsoft and Sony consoles have gone head-to-head, starting with the PlayStation 2 and the original Xbox around the turn of the century. Nintendo exited direct competition on hardware with both companies years ago, starting with the wildly successful launch of the Nintendo Wii in 2006.

These days, the "console wars" are a head-to-head between Sony's PlayStation and Microsoft's Xbox.

But, increasingly across the last few years, Microsoft has shifted its Xbox strategy away from directly competing with Sony's PlayStation console — and it's a brilliant strategy that could end the console wars for good.