Microsoft Gaming CEO Phil Spencer revealed that they lose up to $200 for each Xbox that they sell. Keep reading to learn more about what this means for Xbox's future.
Spencer recently disclosed in the Wall Street Journal TechLive event that Microsoft basically subsidizes Xbox sales. He stated that whenever they sold a console, they lose somewhere between $100 to $200. We're not sure exactly how the subsidy works, although it could be that the relatively cheaper consoles get a bigger subsidy. Selling consoles at a loss is not something new to the gaming industry. Most, if not all, consoles are sold at a loss. Companies make up for this loss through other means, such as through games, console peripherals, and more.
In the case of Microsoft, they also make up for the losses through their Xbox Game Pass. This service allows players to play any of the games in the Game Pass library, even if they don't own them. Think of it like a video game rental service. Players pay up to $15 dollars monthly for this service, and it's very much worth it. Microsoft expects that more people will sign up for the Xbox Game Pass during this quarter, which would help recover the losses they received from the console sales. This is actually a good move, as even PC players can partake in the Xbox Game Pass.
Of course, this business model might change in the future. Previously, Phil Spencer has already said that Microsoft was able to maintain the prices of its games, consoles, and subscription service. However, he continued, he doesn't think that they can keep doing that forever. Eventually, they will have to increase their prices to account for inflation, amongst other things. Spencer previously assured us, however, that this price increase will not come during the holiday season. We are also not sure just which of their items will see a price increase.
Most likely, Microsoft will increase the price of the Xbox Game Pass in the future. They might also increase the price of any future games they will release. Let's just hope that, if they do decide to increase the price of the Xbox console itself, it won't be too high an increase.
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