Xbox Boss Phil Spencer Says Price Hikes Are Coming, But Not Until After The Holidays
"I do think at some point we'll have to raise the prices on certain things..."
Speaking today at a Wall Street Journal event in southern California, Microsoft Gaming CEO Phil Spencer said he believes prices for certain Xbox products or services will go up, but not until after the holidays.
"I do think at some point we'll have to raise the prices on certain things, but going into this holiday we thought it was important to maintain the prices," Spencer told the audience, as relayed by Tom Warren of The Verge.
Spencer was apparently speaking generally about price increases at Xbox and not about any one specific product or service. But people are assuming he's referring to potential price increases for Xbox consoles or services like Xbox Game Pass.
Subscription services across entertainment regularly see their prices increased--Disney+ is the latest to see a price hike, rising to $11/month in December. Netflix, Hulu, and others raise prices from time to time as well.
If it's a price increase for the Xbox console that's coming, that wouldn't be too surprising, either. Supply chain and logistical issues have driven up production costs, and Microsoft could decide to pass along the costs to the consumer with a price hike. Sony did this with its recent PS5 price hike in certain regions.
In August, in the wake of Sony raising the price of the PS5, Microsoft said it was "constantly evaluating" its business with respect to pricing, but the existing US MSRPs for the Series S ($300 USD) and Series X ($500) will remain in place for the time being. The company never, however, strictly ruled out a price hike down the road.
Not raising prices until after the holidays is seemingly a strategic decision on Microsoft's behalf to help make the Xbox platform stand out even more as a more economical choice for people getting into gaming. After all, the real money in games comes from software and services, so even if the profit margins on Xbox consoles take a hit due to the supply chain and logistics issues, software and service revenue could help fill the gap.
Microsoft's Xbox division is riding high right now. Xbox made more money over the past three months than it ever has during a different Q1 period in the company's 20-year history.
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