Future Xbox consoles, codenamed Project Helix, may carry a consumer price tag between $1,200 and $1,800 if Microsoft opts not to subsidize the hardware. This projection comes from a new report by Fortune, which cites internal cost estimates. The potential for significantly higher console prices is attributed to rising component costs, particularly for memory and storage, exacerbated by the ongoing demand from the artificial intelligence industry.
Microsoft has historically subsidized its console hardware, a practice less common for competitors like Sony and Nintendo. This strategy allows the company to offer consoles at a lower price point, recouping costs over time through software sales and services. However, the report suggests that the increasing cost of next-generation hardware might make traditional subsidy levels insufficient to bring prices to more accessible levels. Even current-generation Xbox Series X/S consoles have faced stocking issues despite recent price increases.
The console business model, as previously described by former Xbox boss Phil Spencer, relies on selling hardware at a loss, typically between $100 and $200 per unit, with the expectation of recouping that investment through accessory and digital storefront sales. This model is particularly effective when the console install base is substantial and growing.
However, Xbox's growth in this console generation has reportedly been challenged, potentially impacting the revenue generated from third-party sales commissions, a key revenue stream for platform holders. The report also notes that component prices for RAM are expected to continue rising in 2027 and 2028, further pressuring manufacturers. PlayStation 5's successor, the PS6, is also reportedly facing similar pricing challenges due to the high cost of memory components.