March 20, 2023
Xbox now says it will have to raise prices, but how far?

Xbox now says it will have to raise prices, but how far?

While Microsoft was happy to announce no current plans to raise Xbox-related prices even as Meta and PlayStation began raising their asking price on the hardware, the focus was on “current” plans.

Now, in the face of a global recession and ever-increasing costs, Phil Spencer now says price hikes will likely affect services like Xbox Game Pass and Xbox consoles themselves. That’s what he said to a recent WSJ Live event:

“I think at some point we will have to raise the prices of some things, but as we approach this holiday, we thought it was important to keep prices down.”

So no last-minute holiday hike, but 2023 looks like a great game. But what exactly would those price increases look like? Well, we have a few examples to look at.

If we’re talking about the Xbox consoles themselves, we can look at the PS5 price hikes, which haven’t arrived in the US yet, but in most regions it was an equivalent price hike around 10% or $50 for consoles. For some regions, depending on the currency, it reached almost 25%.

So if Microsoft follows suit, that would mean the Xbox Series S could be priced new at $350, down from $300 previously. The Xbox Series X would go for $550, down from $500 previously. Again, Sony hasn’t raised prices in the US, and it’s unclear if US-based Microsoft would either. Microsoft already has enough problems in international markets where rising prices abroad could cause problems, so the situation may be a little different. But overall I doubt the prices will go up less only in increments of $50.

As for the Xbox Game Pass, that’s another story. While pricing has been stuck for Game Pass almost since its inception, as with all subscription services, that seems subject to change, especially with current economic conditions. Spencer recently confirmed that Game Pass accounts for 10-15% of Microsoft’s gaming revenue and is profitable, but what if…it was more profitable? Hence a rise in prices.

Xbox Game Pass alone costs $10 per month. Game Pass Ultimate, which includes Xbox Live, costs $15 per month, though you can get discounts through bundles.

I guess we can use Netflix as a point of comparison here, and I’ll just use “standard” Netflix pricing.

  • November 2010 – $8
  • May 2014 – $9
  • October 2015 – $10
  • October 2017 – $11
  • January 2019 – $13
  • October 2022 – $16

So yeah, Netflix’s price has essentially doubled in just over a decade, though I’m guessing the volume of content on the service has grown a lot more than that. Yet, we can see that when price increases occur, they are gradual, like a frog slowly boiling in water.

I wouldn’t expect a price increase of more than $1-2 for Xbox Game Pass, so maybe $12 on its own and $17 for Ultimate. I would consider a giant YouTube Premium hike where they just hiked the price by five bucks a month. Still, Xbox Game Pass sticking to its price has been a big selling point, though as we can see that’s sort of how these services start out. Netflix took four years before its first notable price increase. Xbox Game Pass first arrived in 2017, so a bump in 2023 would be an even longer wait, though the scope of what Game Pass is has clearly changed over time. Yet a price increase after this long is far from a huge shock. We’ll see how it plays out next year, most likely.

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