Xbox boss Phil Spencer has admitted that there will be some price increases across Xbox consoles and services, but that Microsoft is holding off until after the 2022 holiday shopping season.
Speaking at WSJ Live (per The Verge’s Tom Warren) Spencer said “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 also noted, “We’ve held price on our console, we’ve held price on games for us and our subscription. 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…”
While not specifically speaking about a particular product, it’s widely expected that this will see Microsoft bump up the price of the Xbox Series X|S consoles, following in the footsteps of Sony’s recent PS5 price hikes. While both companies weathered the storm through the pandemic-driven supply chain shortages, rising inflation around the world and continued pressure on the supply chain and logistics of global shipped have pushed up production costs. Sony chose to pass this along to consumers last month, but Microsoft resisted doing this at the time, but said they were “constantly evaluating” their prices.
If you’re looking for an Xbox console, it’s better to try and grab one in 2022, in other words.
It’s also quite likely that Microsoft will adjust the pricing of their online services, and potentially even games. Many suspect that the price of Xbox Game Pass will increase, as we’ve seen a number of subscription entertainment services do over the last few weeks and months. Netflix did so over the summer, Apple has bumped up the price of Apple Music and Apple TV+ this past week, and Disney+ will jump up in price in December.
The most likely suspect for an increase is Xbox Game Pass, which currently holds at $15 per month for Game Pass Ultimate, but also has well-established conversion rates to other regions that have not yet been adjusted to factor in recent shifts in global economies (some more dramatic than others… sigh). Even if Microsoft holds Game Pass to the current US prices, there could be increases for the UK and Europe to reflect the relative strength of the US Dollar.
Then there’s just the price of games themselves. For the start of the generation, Microsoft stuck to the $60 RRP for games like Halo Infinite and Forza Horizon 5, while Sony, Activision, EA and others sought to balance increased game development costs by increasing prices to $70. Could Microsoft, with a slate of major games including Starfield, Redfall and Forza Motorsport due in 2023 also bump up prices? That would surely make an Xbox Game Pass subscription more attractive.
We’ll see what happens and when, but it’s worth pointing out that neither Microsoft nor Sony would be going to the wall without increasing prices, this would simply impact their profit margins and ability to show never-ending growth to their investors and shareholders, but both companies have high enough margins to try and weather the financial storms for far longer than they have– arguably this is what Microsoft is doing by holding off until next year. Microsoft’s gaming revenue increased by $3.8 billion in the year up to 30th June 2022, and that’s one piece of Microsoft’s money-making pie with over $44 billion made in the past year. That’s a big part of how they’re able to throw close to $70 billion at trying to buy Activision Blizzard.
Source: Tom Warren (The Verge)
