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Tuesday, April 16, 2024

Post-holiday prices increases coming to Xbox even as GamePass subscriber base grows by 159 percent

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In context: When next-generation gaming consoles initially hit stores, many players wait a couple of years for the first price dip. This cost reduction is usually supported by minor design changes that reduce the overall manufacturing overhead. This pattern has held for every console release in at least the last 30 years.

As the PlayStation 5 and Xbox Series reach their second birthdays, prospective owners waiting for that first price drop are finding themselves facing price increases instead. In August, Sony bumped the MSRP on the PlayStation 5 by as much as 10 percent in many regions. It blamed current economic pressures, including hyperinflation, on the need to jack up the price. Now, Microsoft is following suit.

Tom Warren reported that this week, Xbox boss Phil Spencer confirmed that price increases are coming. The good news — if you can call it that — is that there is still plenty of time to buy an Xbox before the hike.

“We’ve held price on our console, we’ve held price on games… and our subscription,” Spencer said during a Wall Street Journal conference. “I don’t think we’ll be able to do that forever. I do think, at some point, we’ll have to raise some prices on certain things, but going into this holiday, we thought it was important to maintain the prices.”

News of the potential hikes come on the heels of Microsoft reporting that GamePass is profitable to its expectations and accounts for 15 percent of the Xbox revenue stream. It has also seen GamePass subscriptions for PC increase by 159 percent year over year, with 20 million players streaming games. The growth of console GP subscriptions has slowed but remains positive.

While he did not get into the specifics of a timeline, the context of his statement suggests that we could see the Xbox Series console rise in early 2023. It also indicates that Microsoft is not reserving increases to only its hardware.

Spencer emphasizes the point that Xbox has “held” the prices on all its products and services, which implies possible hikes across the board. This prospect is likely still being deliberated heavily among the company brass and the board of directors. So it’s too early to say what offerings are going up or by how much. However, console increases between $20-$50 seem likely and are in line with Sony’s move.

For those still waiting for a price dip, it looks like the best chance to get a current-generation Xbox is to wait until the holiday sales start. They may or may not go on sale, but it seems like the only chance because next year, they will likely cost more than they do now. At least Microsoft is giving buyers ample notice, whereas Sony made its increases “effective immediately” upon announcement.

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