Microsoft is implementing substantial price increases for its Xbox Series X and S consoles, citing ongoing issues within the global components market. The price adjustments are set to take effect on August 1.
Models with 512GB storage will see a $100 increase, while 1TB models will rise by $150. The 2TB Xbox Series X model will be discontinued. Specific new pricing includes the Xbox Series S 512GB rising to $499.99 from $399.99, the 1TB Series S increasing to $599.99 from $449.99, the 1TB Series X Digital Edition moving to $749.99 from $599.99, and the 1TB Series X increasing to $799.99 from $649.99.
According to Microsoft, the prices of console storage and memory have more than doubled, with further increases anticipated. The company explained that, unlike many other consumer electronics, consoles are typically sold at a loss. This situation is exacerbated by the broader components crisis affecting the entire industry.
To mitigate the impact of these price rises, Microsoft highlighted available Buy Now, Pay Later options and interest-free financing. The company is also collaborating with retailers to increase the availability of second-hand consoles. Players will have the opportunity to trade in their existing consoles for credit, with these used devices then offered at reduced prices. Additionally, 'Certified Refurbished Consoles' are available directly from Microsoft Stores with discounts of up to $100.
These price adjustments come amid broader industry trends of increasing hardware costs. Sony previously raised PlayStation 5 prices, attributing it to global economic pressures. Nintendo has also indicated price increases for the Switch 2, and Valve faced challenges pricing the Steam Deck affordably. For comparison, the current PS5 costs $649.99, the PS5 Digital Edition is $599.99, and the PS5 Pro is $899.99.
Xbox CEO Asha Sharma recently stated that the rising costs necessitate "radically different business models" for future console generations, expressing concern that mass audiences may find it increasingly difficult to afford new consoles. Sharma's internal memo also revealed that Microsoft's gaming division has a profit margin of 3%, a year-on-year decrease. She noted that despite over $20 billion in investments over five years, annual revenue has declined, stating, "Going forward, this cannot continue."
Microsoft CEO Satya Nadella echoed these sentiments, observing that more Xbox game monetization occurs on YouTube than on Xbox itself. He stressed the need for the Xbox team to innovate in both hardware and games in an economically sustainable manner, concluding that while Microsoft has invested heavily, the priority now is to build a sustainable business model for its entertainment offerings.