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Xbox Series X and Series S consoles are selling at a loss of $100-$200 per console. Microsoft bosses have said they are subsidizing each console sale as they expect to pay back through game sales and Xbox Game Pass subscriptions.
This comes with Spencer revealing that his Xbox’s Game Pass is profitable, suggesting the strategy is paying off. However, the subscription service also reportedly fell short of its annual growth target by about 50%, indicating that it’s not doing as well as the company had hoped.
Phil Spencer revealed earlier this week how much Microsoft is subsidizing its gaming efforts. At the time, he said the console would sell for a loss of up to $200. This is a similar strategy used on his previous Xbox hardware.
Spencer explains that this works because of the options Xbox owners have when it comes to gaming. For example, there are multiple Game Pass subscription levels and the option to easily purchase games directly. Two of his experts cited in the CNBC article disagree with that claim, but he says this diversification will make Xbox “resilient” against ongoing economic struggles. thinking about.
During the trial, Xbox said it was seeing “record engagement” with its software thanks to Game Pass, so this only helps with that effort. Sony isn’t playing by the same rules as this generation, and is currently selling its flagship PS5 model at a profit.There are still losses from the discless version, but the company says this will help PS4 sales.
Of course, that’s not all that surprising. During the lawsuit between Apple and Epic, Xbox testified that it never profitably sold a single Xbox model, including the Xbox One, 360 and original consoles. Sony also used this strategy, selling some PlayStation consoles at a loss. The PS4 never fell below its $299 price tag, so it didn’t turn a profit until later.