Microsoft announced price hikes on Thursday for its Xbox video game consoles, controllers, and games in the U.S. The tech giant says the changes, which entail price increases as high as $130, are due to “market conditions” and greater development costs.
As of Thursday, Microsoft’s cheapest Xbox console, the Xbox Series S, costs $379.99 in the U.S., an increase of $80 from its previous price of $299.99. The Xbox Series X is $100 more expensive, going for $599.99 instead of $499.99. Meanwhile, a premium Xbox Series X with 2 TB of storage is now $729.99, up $130 or 21%.
Starting this holiday season, new games will cost $79.99 instead of the $70 Microsoft set in 2023. The special edition Xbox Wireless Controller also increased in price by around $10, going from $69.99 to $79.99.
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Microsoft stated on a support page that it made the pricing changes “with careful consideration given market conditions and the rising cost of development.” Xbox Game Pass, Microsoft’s subscription service for hundreds of Xbox games, will remain $9.99 to $19.99 per month.
Xbox Series S (white) and Xbox Series X (black). Photo by JUNG YEON-JE/AFP via Getty Images
Microsoft competitors Nintendo and Sony are also raising prices. In April, Nintendo announced that its new Switch 2 console was priced at $449.99. In comparison, the original Switch cost $300 when it launched in 2017.
Sony also said in April that it is raising prices for its PlayStation 5 console by 11% in Europe, Britain, Australia, and New Zealand due to inflation and varying exchange rates. The console now costs around $569 in Europe and Britain, but still costs $499.99 in the U.S.
Video game development costs are substantial. Microsoft acquired gaming company Activision Blizzard in 2023 for $68.7 billion. Patrick Kelly, Activision’s head of creative, has since revealed that three recent Call of Duty games cost between $450 million and $700 million to make (each), the highest development costs ever disclosed by a video game developer.
Though games may cost more to create, they are still a lucrative part of Microsoft’s business. Microsoft’s latest earnings report, released earlier this week, showed that revenue in its More Personal Computing unit, which includes gaming revenue, increased by 6% to $13.37 billion for the quarter ending March 31.
Microsoft CEO Satya Nadella told investors on an earnings call on Wednesday that Microsoft Game Pass revenue increased 45% year-over-year and that Xbox content and services grew 8% year-over-year, marking the best quarter yet in Xbox gaming history.
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Microsoft stated in 2021 that it does not make a profit on Xbox console sales, selling them at a loss. The tech giant instead generates profit from game sales and its Xbox Game Pass subscription.
Microsoft has sold 27.7 million units of the Xbox Series X and S as of February 2024, per Statista estimates.
