TECH NEWS – Xbox chief Phil Spencer has revealed how much money the company loses with every console sold and talked about other Xbox business decisions.

In a fresh interview, Xbox chief Phil Spencer reveals how much Xbox loses with every console sold. Contrary to what many gamers believe, new game consoles are usually sold at a loss. The company then recoups the money over time through other business transactions, such as software sales and subscription services. This is typically done to keep the cost of the console reasonably low. Or to entice customers to buy the new console.

Phil Spencer has been the head of Xbox since January 2022 but has held various roles at Xbox and Microsoft.

At a WSJ Tech Live event, Spencer revealed that every Xbox console sold could mean a loss of up to $200. Spencer went on to describe consoles as a business model. “Consoles evolved to a business model much different from phones where consoles are actually sold at a loss in the market,” Spencer said. He explained that Xbox’s investment strategy is to make up for the loss on each console. They’re doing this by selling accessories and “storefront.” The company also uses Xbox Game Pass as a service. Spencer said it is profitable and does not accumulate losses. Spencer also previously commented on the price of the Xbox Series X/S. At the time, he said there were no plans to raise the price of the consoles, but he did not rule out the possibility of doing so in the future.

Although Xbox loses money on every console sold, Microsoft’s earnings report shows that Xbox has had one of the most profitable years in its history.

Spencer wants to build on that, promising an even stronger year for Xbox in 2023. In the interview, Spencer admitted that not many exclusive titles were released this year. But he hopes that next year will be different. He hinted at the release of games such as Starfield and Redfall.

It has been common practice for Xbox and PlayStation over the last few console generations to sell consoles at a loss. This is because component prices are rising. There is no reason to fear that they will soon run into problems. At least as long as the company can find other ways to compensate for the loss of Xbox consoles.

Source: CNBC