Microsoft Sells Every Xbox At A $100-$200 Loss, Says Phil Spencer
Expect a price hike of Xbox consoles in the future as well.
In case you had it the other way around, Xbox CEO Phil Spencer has clarified that the company’s front-running next-gen consoles aren’t the products that promise profitable returns. As a matter of fact, the Xbox Series X is sold at a $200 loss whereas the Xbox Series S makes Xbox lose $100 on each sold unit.
Both consoles are priced at $499 and $299 respectively. Whenever you buy one of these, therefore, you aren’t paying Xbox’s bills. It’s easy to wonder how is this so, given the popularity of the company and an exponentially increasing number of sales year in and year out. Thankfully, Phil Spencer has the answer to that just as well.
- The CEO of Xbox Phil Spencer has stated in an interview that both next-gen consoles Xbox Series X and Xbox Series S are sold at a loss of up to $200.
- Rather than relying on the sales of consoles for the company’s profit margins, Xbox makes money by selling software and subscriptions.
- Phil Spencer has also revealed that he cannot promise Xbox consoles’ price points to remain the same forever.
CNBC held an interview with Xbox CEO Phil Spencer in relatively recent times, having the industry mogul over a conversation concerning gaming’s relationship with the economy of the nation. Spencer has apparently admitted that the two consoles currently offered by the company aren’t making Xbox any money.
Instead, profits are gained when players purchase the various accessories affiliated with the mainline consoles, such as extra controllers, headsets, and other storefront purchases. Furthermore, Xbox Game Pass is another giant to take into account here.
Xbox’s subscription service active on both console and PC is a major constituent of Xbox’s finances. According to Brazil’s Administrative Council for Economic Defense (CADE), an estimate was given out as to the amount of money Game Pass makes for Xbox.
The reported sum was around about $2.9 billion, and these figures pertain to console sales alone. These statistics show precisely how important the subscription model is for Xbox, attributing to a near-perfect formula of paying for less and playing more and enticing the wide user base that the company has generated over time.
Moreover, PlayStation has lately hiked the prices of the PlayStation 5 console in select markets due to “global economic environment” and high inflation recent. Commenting on this, Spencer had the opinion of not hiking Xbox consoles at the moment, not until at least the holiday season is over.
With that said, due to a bevy of factors, the same $499 and $299 price points of the Xbox Series X and the Xbox Series S consoles won’t remain the same forever. This is according to Spencer himself who commented on the situation while speaking at The Wall Street Journal’s Tech Live conference last week.
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