Xbox still not making a profit on console sales despite price rise says report

An insider claims the Xbox Series X/S is still selling at a significant loss, and the August price hike still won’t push it into profit.

Video game consoles are typically sold at a loss at launch, with sales of peripherals, games, and online services like PlayStation Plus helping to recoup the costs. 

As we’ve seen with Sony’s PlayStation 5, consoles usually become profitable over time. However, with the current generation, the memory shortage has hiked up component prices, leading to a wave of console price increases to keep profits steady.

Every company has been impacted by these component costs, but Microsoft seems to be the most affected. Microsoft was already selling the Xbox Series X/S at a loss, as reported in 2022, but it seems the situation has only got worse four years later, due to the RAM crisis. 

According to Windows Central, Microsoft is losing ‘around $150 (£112) per Xbox Series X/S sold recently due to memory price increases’. Additionally, it’s claimed the console will still lose money after the August price hike, which will see the Xbox Series X 1TB model go up by $150. 

For a comparison, Sony’s PlayStation 5 has been profitable since 2021. However, it’s unclear if the memory crisis, which has caused Sony to increase console prices too, has changed that situation. 

Nintendo, meanwhile, reportedly sold the Switch 2 at a loss when it launched last year, despite the company traditionally being the only console manufacturer to sell hardware at a profit straight from launch.

The company is introducing a price hike in September, which, according to Nintendo president Shuntaro Furukawa, was because they felt ‘the profitability of our hardware would suffer significantly’ if they kept the current price. 

Speaking to Bloomberg, Hideki Yasuda, an analyst at Toyo Research Advice, suggested a price increase for the Switch 2 would only make the console less of a burden, rather than truly profitable. In other words, it sounds like the Switch 2 will still be selling at a loss after September.

That’s common for a new console, if not a Nintendo one, but the Xbox Series X/S is almost six years old at this point – and is lagging far behind the PlayStation 5 sales wise. Xbox CEO Asha Sharma recently stated 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 wrote in a memo to staff. ‘We are currently unable to make as many consoles as players want to buy, and we need a new business model and partnerships for hardware as we remain committed to [Project] Helix.’

With low sales, dismal profits, and a component crisis on top, it’s unclear how Xbox can claw its way back with its next console, Project Helix. The console is expected to launch in 2027 or 2028, and based on all the evidence, it will be far from affordable. 

Due to its losses over the past year, Xbox is set to layoff approximately 3,200 people before the end of the financial year. It has also cut several studios, including Double Fine and Ninja Theory. 

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