Xbox CEO Phil Spencer recently spoke at the WSJ TechLive event and stated that the new generation of Xbox consoles is sold at a loss and eventually these consoles may need to see a price hike.
Spencer commented that, “Consoles as a business model, in the overall scope of gaming, are fairly small relative to the places people play. Consoles evolved to a business model much different from phones where consoles are actually sold at a loss in the market.” He went on to say, “So when somebody goes and they buy an Xbox at their local retailer we’re subsidising that purchase somewhere between a hundred and two hundred dollars, with the expectation that we will recoup that investment over time through accessory sales and storefront”.
Consoles are often sold at a loss since too high of an entry price point could impact customer sales altogether. However, the long-term goal is to see those losses regained elsewhere through other sales, through the likes of controllers or headsets, and software sales also contribute such as the Xbox Game Pass service.
Possible price hikes incoming
Back in August Sony announced that it was increasing the price of the PS5 due to inflation and production costs. However, Spencer commented at the time that Xbox would not be raising its prices. Despite this and the strategy to regain money elsewhere, Spencer is now saying he foresees a possible future in which base prices may need to go up.
Speaking on this matter Spencer said, “We’ve held price on our console, we’ve held price on games and our subscription. I don’t think we’ll be able to do that forever… I do think at some point we’ll have to raise some prices on certain things, but going into this holiday we thought it was important to maintain the prices”.
In the face of a global recession and inflation in prices, Spencer seems to be attempting to prepare Xbox customers for a very likely scenario that would either see the price of Series X and S consoles go up and perhaps certain services such as Game Pass.
Game Pass is certainly the bargain of the year at just £10.99 for Ultimate featuring all that most Xbox gamers could ever need. Perhaps now is the time to investigate a year’s sub?
For now, people can be reassured that no price hikes will happen this year, so those looking for an Xbox this Christmas can still grab one at the familiar £449/£249 X/S pricing.
Paige Cook is a writer with a multi-media background. She has experience covering video games and technology and also has freelance experience in video editing, graphic design, and photography. Paige is a massive fan of the movie industry and loves a good TV show, if she is not watching something interesting then she's probably playing video games or buried in a good book. Her latest addiction is virtual photography and currently spends far too much time taking pretty pictures in games rather than actually finishing them.
