Xbox Removing Avatars Because You All Forgot About Them
Briefly

Microsoft confirmed it will discontinue Xbox avatars on Series X/S consoles by January 9, 2025, citing low engagement after a decade of gradually diminishing support.
Avatars were introduced in 2008 for Xbox 360, gaining early popularity, but have since been sidelined as their presence on consoles diminished over the years.
This decision to remove avatars is linked to their lack of user engagement, leading Microsoft to conclude that they are no longer a viable feature for Xbox users.
Players who bought items for their avatars after November 1, 2023, will receive refunds, but the original Xbox 360 avatars will remain supported in compatible games.
Read at Kotaku
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