Xbox price hike is likely on the horizon but only after holidays

Microsoft Gaming CEO Phil Spencer said that a price hike for Xbox is a possibility but not until after the holidays.

Speaking at the Wall Street Journal Tech Live conference in southern California, Spencer said that it may not have a choice but to apply a price hike for Xbox consoles and services in the near future. Unlike Sony, which raised prices for the PlayStation 5 in several markets by about 10%, Xbox has chosen to hold ground.

However, Spencer conceded an inevitable raising of prices. A disruption of the energy market has seen Microsoft’s cloud overheads soar in Europe to the tune of $800 million. Services powered almost entirely by data centers such as digital game sales and downloads, and streaming content via cloud through Xbox Game Pass are overheads that are eating into Microsoft’s profits. Spencer said that Xbox “may not be able” to keep prices as they are today.

“For us running the business, we have to look at the return on our business, the cost of the business. We’ve held price on consoles, and held price on games, and our subscription. I don’t think we’ll be able to do that forever,” said Spencer. “I do think that at some point, we’ll have to raise some prices on certain things, but going into this holiday, we thought it was really important to maintain the prices that we have because consumers, right now, are more uncertain than they have been in a long time. And I want our medium of video games to be something that they find attractive.” 

During the same interview, Spencer said that Xbox Game Pass is quite profitable for the company, despite speculations to the contrary. Spencer maintained that Xbox Game Pass is between 10 to 15% of overall Xbox revenue while conceding that growth has begun to slow down on consoles. A recent earnings call had Microsoft CEO Satya Nadella noting that PC Game Pass was up 159% year-over-year, showcasing the opportunity Microsoft has when it comes to building its gaming base beyond the traditional console base. 

Xbox price hike
Phil Spencer in a BloombergiInterview

Earlier this year, Sony announced that there would be an increase in the recommended retail price for PlayStation 5, Xbox fans were worried that Xbox consoles would follow this trend as well going into the holidays, to which Phil Spencer made a statement saying that, “We think in a time when our customers are more economically challenged and uncertain than ever, we don’t think it’s the right move for us at this point to be raising prices on our console.”

With all the facts laid out, it’s only a matter of time now until Microsoft decides to increase their console price points, but at the very least Phil Spencer has promised that if it does come to that, it’ll only do so after the holidays.