Believe it or not, most gaming companies don’t turn a profit on the sale of hardware However, the thought of a company actually losing a three-figure sum of money on the sale of hardware might come as a surprise, and that’s what Microsoft Gaming CEO Phil Spencer revealed during a recent conversation with CNBC . Over the course of the interview — which was centered around how Xbox and the video game industry as a whole are managing the current economic downturn — Spencer confirmed that Microsoft loses roughly $100 USD every time it sells the Xbox Series X, and loses up to $200 USD when on a sale of the budget-minded Xbox Series S.
What makes the loss on the consoles up are the proprietary accessories and games that accompany them, which often boast large profit margins. Next-generation games are beginning to creep upward in price, with select titles featuring an MSRP of $70 USD instead of $60 USD, but Microsoft has yet to break that threshold. Specter mentioned to CNBC that Xbox may still raise prices on “some things” but not during the holiday season. Though Specter did not specify what could see a price increase, it could be the Xbox Series S (to offset some of the $200 USD loss directly) as well as the monthly cost of subscription services like Xbox Live or Game Pass.
Kotaku notes that selling consoles at a loss is not a new practice, with Sony reportedly taking a $240 USD hit every time they sold a PlayStation 3 and Microsoft telling a court that they’ve never turned a profit on their consoles during 2021’s Epic Games v. Apple court case. The only company that does make money on its consoles? Nintendo, which turns a small profit on the Switch.
Keep it locked to Hypebeast for more info on potential Xbox price increases, and be sure to check out the latest installment of our weekly tech roundup for all the latest and greatest tech stories.
Tagged: gaming