Microsoft will raise U.S. prices for Xbox Series X and Series S consoles again from August 1. The company is blaming the worsening components crisis while also removing the 2TB Xbox Series X from the lineup altogether.
Systems with 512GB of storage will become $100 more expensive, while 1TB models will go up by $150, putting the cheapest new Xbox at $499.99 in the United States. Microsoft is also ending production of the 2TB Xbox Series X, which means the largest-storage current-generation Xbox will soon disappear from stores. It is another major price increase in a short period of time, pushing the brand even further away from the role it once occupied as the more affordable way into console gaming.
New U.S. Xbox Console Prices:
Xbox Series S 512GB: from $399.99 to $499.99
Xbox Series S 1TB: from $449.99 to $599.99
Xbox Series X 1TB Digital: from $599.99 to $749.99
Xbox Series X 1TB: from $649.99 to $799.99
Microsoft already increased U.S. Xbox prices by $20 to $70 last October, while saying at the time that it hoped another rise would not be needed. Over recent months, it says it worked with suppliers to find alternatives, but the cost of memory and storage components used in consoles has increased by more than two and a half times, with another major increase expected by fall 2027. Consoles are particularly exposed because manufacturers have traditionally sold them at slim margins, or even below production cost, expecting to make their money back through games, subscriptions, and other services.
“The entire consumer electronics industry is struggling with the current components crisis, but the effects are particularly hard on consoles. Unlike phones, computers, speakers, and other consumer devices, consoles are typically not sold at a profit, but instead for less than they cost to make,” Microsoft said.
The company is attempting to offset the higher prices with payment and resale options. There will be Buy Now, Pay Later plans and interest-free financing, while Microsoft is also working with retail partners to make lower-priced used Xbox systems available. Players who want to upgrade, or no longer use their existing console, will be able to trade it in with participating retailers for cash or store credit. Those systems will then be sold on at a lower price, while certified refurbished consoles will also be available through Microsoft Stores with discounts of up to $100.
The timing is especially awkward ahead of GTA 6’s November release, which is expected to drive demand for PlayStation 5, Xbox Series X, and Xbox Series S hardware sharply upward. At the same time, the AI-driven hardware boom is making life much harder for console manufacturers just when they need to make as many machines as possible: memory and storage components are becoming more expensive, while supply capacity is getting tighter. Earlier this month, Xbox CEO Asha Sharma said that soaring costs for new and existing consoles may require “radically different business models” in the next generation.
Sharma said the industry has reached the point where it is difficult to imagine mass audiences still paying thousands of dollars for a new generation of hardware. This generation has already developed in an unusual way, as consoles are getting more expensive instead of following the traditional pattern of becoming cheaper over time. Sony raised the price of PlayStation 5 in March, citing continued pressure from the global economic environment, while Nintendo recently acknowledged that Nintendo Switch 2 will also become more expensive barely more than a year after launch. Valve could not release Steam Machine at the price it originally hoped for either, and the system is now set to arrive with a $1,049 price tag. For comparison, PlayStation 5 currently costs $649.99 in the United States, PlayStation 5 Digital Edition costs $599.99, and PlayStation 5 Pro costs $899.99.
Xbox is meanwhile in the middle of an internal transformation that Sharma has simply called a “reset.” The process is expected to involve significant layoffs, and there are already serious concerns over the future of Hellblade developer Ninja Theory, South of Midnight studio Compulsion Games, and Psychonauts developer Double Fine. Sharma’s internal memo said Microsoft’s gaming business currently has an accountability margin of just 3%, and that figure has deteriorated year on year. “Excluding Activision Blizzard King, over the past five years, we have spent over $20 billion on ongoing investments in our content, platform, and hardware subsidy, but our annual revenue has declined nearly half a billion during that time. Going forward, this cannot continue,” Sharma said.
Microsoft CEO Satya Nadella later painted an even more uncomfortable picture of Xbox’s current position. He said there is more monetization happening around Xbox games on YouTube than on Xbox itself, which means the team needs to find economically viable ways to innovate in both hardware and game development. “No one can accuse Microsoft of not having invested for the last 25 years. Now, we have to turn this into a sustainable business that delivers what is fundamentally one of the best sources of entertainment, still,” Nadella added.
Source: IGN
