Xbox Series X/S Price: Why Microsoft Went Low

A top executive at Xbox explains why Microsoft priced the new Xbox consoles so low.

59 Comments

Update: Sony has now officially announced the price and release date for the PlayStation 5 ($500 USD) and the PlayStation 5 Digital Edition ($400 USD). The consoles are available to pre-order now, and you can check out GameSpot's PS5 Pre-Order Guide to learn more.

Microsoft recently announced the prices of the Xbox Series S ($300) and Xbox Series X ($500), and they came in lower than some might have imagined, especially the lower-spec S model. The consoles were intentionally priced low, and Microsoft is launching the phone-style subscription plan, to make it easier to get people into the Xbox ecosystem and then start spending money on games, according to Xbox CFO Tim Stuart.

Stuart told Barron's that the aggressive pricing for the Series S/X consoles will help Microsoft "kick-start" the new generation.

"Our goal was to increase that top-of-funnel as fast as possible, get people into the ecosystem, get people into that next-gen experience, and frankly kind of kick-start this generation as fast as we can," Stuart said. "If you can get that install base as big as you can up front, you have customers enjoying the next-gen experiences we have to offer. And from a business side, we start to monetize and build a customer lifetime value much faster than a slow build over time."

Microsoft could lose as much as $100 on every Xbox Series X sold, but the company will make up those losses with game sales and subscription revenue like with Xbox Game Pass. It's common for consoles to act as loss leaders, but this is a larger margin than usual. Stuart spoke about this in the interview with Barron's.

"I like to talk about how engagement equals currency," he said. "If customers are playing, they're buying more things from our partners, they're buying more things from us, and their enjoyment goes up."

For comparison, the Xbox One launched at $500, which was a full $100 more than the PS4. This price gap, along with various other stumbles by Microsoft (such as a controversial plan to block used games that was abandoned ahead of launch), led to a difficult position for the company relative to the competition.

This generation, Microsoft is starting off from a stronger position with a lower price (when factoring in inflation) and the smartphone-style Xbox All Access program where you get can an Xbox Series S for $25/month or an Xbox Series X for $35/month.

Kotaku did some calculations and reported that the Series X ($500) is less expensive than the launch prices for the Xbox 360 ($529) and the Xbox One ($555) when adjusting for inflation. The original Xbox, released in 2001, cost $299 at launch.

While Microsoft has announced the price and release dates for its next-generation consoles, Sony has yet to divulge the launch details for the PS5 and the digital PS5. We also don't know if Sony will follow Microsoft's path and offer a subsidized program as well for the consoles.

Sony is holding a PS5 showcase on September 16, so it might not be long until we learn more about the console and its price/release date.

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Avatar image for madkog007
madkog007

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I will get xbox series X not because I don't have a gaming pc, but because I want a console connected to my TV for good 3rd party console games.

Don't get why people say, I won't get it because I have a Pc with access to the same games.

Racing games, sports games, platformers, action adventure games all excel on TV and controller.

Other games are better on keyboard and mouse on my pc with a pc screen.

There is no way I am going the carry my pc over to my TV orr stream.

Steam still sux for TV.

For those who need a HT Pc and console games, xbox series X or ps5 is still very relevant!!!

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Avatar image for jenovaschilld
jenovaschilld

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@madkog007: For those who need a HT Pc and console games, xbox series X or ps5 is still very relevant

This is very true. I mostly play on PC, lucky enough to afford a high end gaming system. But sadly the games are usually poor ports from consoles. And the gamed I like to play are usually exclusives like RPG's JRPGS, adventure RPGs that rarely if ever get ported. And 8th gen consoles work just fine for what I need.

And since there has been over 250+ million consoles sold 8th gen, with the highest tie in ratio, lol - it will be a long while before the console is dead.

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Barighm

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Standard MS sales tactics.

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Kradnam2

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Is it just me ? but in the video the guy compliments how great the design of the x and s systems are.... is he kidding ? out of all the xbox systems, these are the worst design yet. The X looks like a bass tube for a car and the S looks like the subwoofer under my desk.

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6T4GP

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Has anyone heard if MS will have a trade in program? If so the the bundle will cost even less. You think MS is holding that information till after PS5 gives it's price?

Just think there is no reason to keep your old Xbox one because the X/S are backwards compatible even down to the controllers. If give you just $100 for trade that would make the S $ 20 a month and the X for only $30.

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Mogan

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Mogan  Moderator

@6t4gp: Yeah, the trade in vale of my One X at GameStop is currently $175, which means the Series X is "aggressively priced" at $325 for me. : p

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6T4GP

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@mogan: that's a good price. You think MS will be more aggressive?

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Mogan

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Mogan  Moderator

@6t4gp: Hopefully they get more aggressive with some games in the next year or so.

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LouiXIII

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If they want to compete, they have o at this point and a monthly plan was a great idea along with pricing the S that low but there's a problem... Though the S has the CPU but it's lacking tremendously everywhere else. Ram, GPU, like how poorly will high end exclusives run on it? Also, you're more with the payment plan so there's interest there. If you can't afford to pay $300-$600 outright then you shouldn't be buying a console at this time. I wonder how Rent-A-Center feels about this lol

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FirstDawn

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@louixiii: That information is incorrect. The payment plan from MS is no interest.

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mursexxx

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"Why Xbox Series X Is Priced So Aggressively"

Economics 101

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jinzo9988

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The hardware isn't worth anything if I'm not interested in playing any software on it. Game Pass is in a weird spot... I don't know that me subscribing to it to play games on a PC is a "win" for Xbox necessarily. I wonder if their goal is to try and merge the two audiences to make Xbox the console seem bigger than it actually is by mixing up all of these terms together and branding everything as "Xbox" and "Game Pass". I'm not really interested in any Microsoft exclusives outside of the Forza franchise and if I can get that on PC through Game Pass then the console is dead in the water for me.

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quinnd6

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Edited By quinnd6

I was complaining about the price of the Series X till I found out how powerful it actually is. The GPU is comparable to an RTX 2080ti. It's very powerful. That GPU is still super expensive. Apparently PS5 GPU is not as powerful which is a bit of a shame but they have a faster SSD. It'll be interesting to see how things pan out. That's part of why I'm waiting and my backlog.

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MoogleStar

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They don't wanna be beaten by Sony four times in a row. That's why. Granted, it was close with PS3. But yeah. Try your best MS.

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durantftw

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@mooglestar: Yeah I doubt $50 up or down will change that. What they need is long term support of their first party devs, in order to start producing great titles on a regular basis. Unless PS somehow really screw up their launch(like Xbox did with the Kinect), I don't see how Xbox can dim down the supremacy.

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MoogleStar

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@durantftw: Ultimately what keeps Sony on top is their solid first party games. MS doesn't have that. And they're already putting their few exclusive titles on all the previous console and PCs, making it even more pointless to get a Series S/X.

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Notafan

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Well I see the PS5 matching the 500 dollar mark at this point. Simply because I don't see them taking a huge hit on the PS5 simply because the company can't afford to lose money like that and survive.

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Chupert

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How is $500 "low"? That's half a really good computer which has access to ALL the Xbox library, and most PS5 games plus all PC Games, can be updated and always has better graphics, consoles are supposed to be cheaper, that's their thing. I really rather get a RTX 3070 with that money.

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Crazy_sahara

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Edited By Crazy_sahara

@Chupert: there are people who would pay 3 times the price of 3070,3080,3090, yet can't buy any due to location and country, yet your weiny ass can, yet still thinks it's pricey.

Filthy Americans.

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Chupert

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@Crazy_sahara: lol I'm from Ecuador in South America and I can get a 3070 just as easily as a PS5 or XBox so whatever hole you live in thats worst than a 3rd world country you are the minority of the minority.

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Crazy_sahara

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@Chupert: 3070 isn't important it's the 3090, I see why they gave you the 3070, sorry about that.

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durantftw

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Edited By durantftw

@Chupert: A $500 PC will barely play you the current games, let alone play you all the newest games for the next 7 years.

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Chupert

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@durantftw: I said half a PC

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durantftw

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@Chupert: Wouldn't strut around proudly screaming master race with a 1k PC either...

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BDRTFM

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Edited By BDRTFM

We won't really know how strong of a position Microsoft is starting with until Sony stops stonewalling and reveals their pricing. But I'm betting Sony will match the price of $500. Its the digital only model vs. the Xbox Series S that will be interesting to watch. A lot of parents really don't care about resolution and frame rate if they see a console $100-$200 cheaper than any other console. Similar thing if you don't have a TV or AV system that can take advantage of the XseriesX or PS5's specs. In the end, it doesn't really matter because the average gamer is 35 years old and many of them will buy based on brand familiarity and what their friends are buying. Its going to be interesting to watch because really anything can happen this gen.

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Terrorantula

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Cause Microsoft has no exclusive

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Tiller720

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Can't see PS5 matching these prices

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Mogan

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@tiller720: I'd be very surprised if Sony pulled another PS3. My guess is that $500 isn't where Sony wanted to be, but they'll take the hit to match Microsoft's price.

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Gamerforlife96

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Bc nobody will buy it lmao

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Fitzy_2812

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I don't think its aggressive at all, they are priced exactly where the large majority expected them to be. A few people were expecting slightly higher and if the economy was in better shape, they might have been right. Australian pricing is actually quite high also (despite being accurate with exchange rates, it seems Microsoft didn't take their usual hit here to lower it a bit), higher than even an inflated X1X launch price, so not everyone got away with such a good deal (although this was kind of expected given Australia's slightly better performing economy right now).

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R0B0TPIRATE

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Wow, for once a new gen console does what it should and more. Boy do I feel like crap with my 2070 Super PC build knowing the Series X will give me the same performance :(

So external HDD is needed to play any Xbox One games then?

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hjroman

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@mutantmike: You can use an external USB 3.0 drive to store games but to play them they should (XBOne)/must (XBS) be on the internal SSD or in the external Seagate SSD cartridge. Moving games between drives is not a big hassle, specially with the ultra-fast SSD.
Should: preferably.
Must: mandatory.

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thenephariouson

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Edited By thenephariouson

.....Because its no longer simply about the 'Box', but the Ecosystem which when you take into account the PC community, is already the largest in the world.

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PrpleTrtleBuBum

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@thenephariouson: assuming those pc people use xbox products. i have 3 pcs and none of them include/use and xbox related. yea there is the xbox app but its just an icon

now that steam has ms games they might be able to drain in some users but still pc gaming is 50 times laeger than ms xbox games

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Crazy_sahara

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Edited By Crazy_sahara

@PrpleTrtleBuBum: You know predominantly Microsoft owns windows, just as arm owns the phone manufacturing license.

Go drag your steam shit to apple or Linux you weiny ass...

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Gallowhand

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Well, Microsoft has deep pockets so they can absorb any initial losses on the console. So far they've made smart moves with the Game Pass and purchase plans for the new systems. Their acquisitions of good development studios is also in their favour, and should improve their first party line-up, as long as they don't make the same mistakes they did in the past. I skipped the Xone consoles, but I still have some X360 and original Xbox titles I'd like to revisit, some of which are on the XSX/XSS BC list. So I'm certainly tempted to jump back in. Honestly, if the XSS had a disc drive, I would probably get one. I don't have a 4K TV (with no intention of getting one), so 1080p with higher frame rates would be fine for me. If MS announces an external blu-ray drive attachment for the S, it may be a done deal.

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hjroman

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@Gallowhand: I am stuck with my XBOneS because I have several games on DVD & BD. I would have liked to replace it with the XBSS because I don't plan to buy a 4K TV. :-(

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sladakrobot

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Edited By sladakrobot

One thing is for sure...no Titanic launch this time around.

If MS can build up a solid base and support the plattform with good games constantly over time,there is a good chance to rival the X360 era.

Games like Flight Sim,Wasteland 3 and Gears Tactics hopefully are an indicator of the quality of games in future we can/should expect

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GamerBum

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I think the cheap prices and the All Access subs are a great move from Xbox and ps should do something similar. Certainly good for gamers.

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