It’s not uncommon for console manufacturers like Microsoft and Sony to sell hardware at a loss, but thanks to a recent WSJ TechLive interview with Xbox boss Phil Spencer (via CNBC), we now know roughly how much Microsoft is losing on each piece of current-gen hardware it sells.
Chatting about the state of Microsoft’s console business during TechLive, the long-serving Xbox chief said the company currently loses between $100 to $200 on each sale of the Xbox Series X and budget Xbox Series S.
Spencer said the company accepts the loss because it anticipates recouping the cost when owners purchase accessories or buy software through the Xbox Marketplace.
Xbox owners can also access a huge variety of titles, including popular first-party content, through Xbox Game Pass. According to Spencer, the subscription service is currently turning a profit and accounts for 15 percent of Microsoft’s content and services revenue.
Speaking more broadly about the future of Game Pass (via The Verge), Spencer also quashed the notion that the Netflix-style model will eventually become the main revenue driver at the company. “We don’t have this future where I think 50–70 percent of our revenue comes from subscriptions,” he said, explaining that eventually the company will have “reached everybody on console that wants to subscribe.”
Earlier this year, Microsoft told Windows Central it had no plans to increase the price of the Xbox Series X | S after Sony chose to raise the price of the PlayStation 5 in key markets due to “high global inflation rates.”
More recently, however, Spencer told those at a WSJ Live (via The Verge reporter Tom Warren) event that the company will have to “raise the prices on certain things” at some point, but confirmed that those increases won’t take place until after the upcoming holiday season. It’s also worth noting that Spencer didn’t specify what products will be getting a price bump, leaving us firmly in speculation territory until Microsoft announces concrete plans.