Microsoft is still selling the Xbox Series X/S at a significant loss, and an upcoming price increase in August will not push the console into profitability, according to a report from Windows Central. The company is losing around $150 (£112) per unit due to rising memory costs.
Memory crisis deepens losses
Video game consoles are typically sold at a loss at launch, with profits coming from accessories, games, and services. However, the current generation has been hit by a memory shortage that has driven up component prices. Microsoft has been particularly affected, with losses persisting four years after launch.
According to Windows Central, Microsoft is losing about $150 per Xbox Series X/S sold recently because of memory price increases. The August price hike, which will raise the Xbox Series X 1TB model by $150, is still not enough to make the console profitable.
Comparison with competitors
Sony's PlayStation 5 has been profitable since 2021, though it is unclear if recent component price increases have changed that. Nintendo, traditionally the only console maker to sell hardware at a profit from launch, reportedly sold the Switch 2 at a loss when it launched last year. The company plans a price hike in September, which Nintendo president Shuntaro Furukawa said was because 'the profitability of our hardware would suffer significantly' if the current price remained.
Hideki Yasuda, an analyst at Toyo Research Advice, told Bloomberg that a price increase for the Switch 2 would only make the console 'less of a burden, rather than truly profitable,' suggesting it will still be sold at a loss after September.
Xbox's struggles mount
The Xbox Series X/S is nearly six years old and has sold an estimated 35 million units, far behind the PlayStation 5's 93 million. Microsoft stopped reporting console sales early in the Xbox One generation. Xbox CEO Asha Sharma stated in a memo that the component crisis has impacted the company more than its rivals: 'While the entire industry is facing a components crisis, we believe we have been impacted more greatly than many of our peers due to the choices we made over the last half decade.'
Sharma also wrote that Microsoft needs 'a new business model and partnerships for hardware as we remain committed to [Project] Helix,' the next Xbox console expected in 2027 or 2028. Due to losses, Xbox plans to lay off approximately 3,200 people before the end of the financial year and has cut several studios, including Double Fine and Ninja Theory.
