Microsoft loses between $100 and $200 on every Xbox it sells

A close-up photo shows a white controller resting on a white Xbox console.

Video game consoles are very expensive pieces of computer hardware crammed into relatively small boxes and packed with expensive controllers. So it’s no surprise to hear that Microsoft doesn’t make money selling Xbox consoles. In fact, these days it loses up to $200 for every console sold.

Previously, Xbox boss and head of games at Microsoft Phil Spencer explained that the company may still raise prices on “certain things”, but not this holiday season. While many guessed he was talking about Game Pass or Xbox Live, it’s also possible that Microsoft will raise the price of its budget console, the next-gen Xbox Series S. It seems even more possible now that Spencer has confirmed that the company is losing money on every console. sold.

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In a recent interview with CNBC, Spencer discussed how video games and the Xbox brand in particular are doing during the ongoing economic downturn. Rising prices and record inflation are weighing on many as the dollars aren’t going as far as they used to. During the interview, Spencer confirmed that Microsoft loses around $100 every time it sells the Xbox Series X for $500. And he loses even more, up to $200, every time he sells the smaller Xbox Series S for $300.

spencer said CNBC that Microsoft expects customers to buy the subsidized consoles and then buy accessories and games, which will help offset the losses. Although Spencer hasn’t said anything about the price increase on next-gen Xboxes, he did say CNBC that he doesn’t think Microsoft will be able to keep game prices constant forever. We’ve already seen the game rise to $70 since the launch of the PS5 and Xbox Series X/S. Microsoft hasn’t released a $70 game yet, but it looks like future releases like red fall Where star field could take the leap.

Of course, selling consoles at a loss is not a new practice. Microsoft itself told the court in the Epic v Apple case that it never made a profit selling any of its Xbox consoles. Sony also reportedly sold the PS3 at a loss of $240. The only real exception to all of this is Nintendo, as the company behind the Switch and Wii tends to make money off of its consoles. Even if Nintendo’s profit is only $6 per Wii, that’s a lot better than losing hundreds of dollars per unit sold. Meanwhile, Sony has raised the price of the PS5 in some parts of the world.

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