Xbox Console Prices Rising
Xbox is at a massive crossroads. With layoffs looming and console price hikes on the way, Microsoft’s gaming division is undergoing a historic restructuring. 🎮
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Going forward, this cannot continue. That is the blunt warning from new Xbox CEO Asha Sharma as Microsoft prepares for massive layoffs next week in a monumental restructuring of its gaming division.
For 25 years, Microsoft has subsidized its console ecosystem, but that defining moment of endless financial backing is over as leadership demands a paradigm-shifting pivot toward profitability. Despite spending more than $20 billion over 5 years, the division has watched its core annual revenue fall by nearly $500 million.
This massive spending has yielded a thin 3% profit margin, forcing CEO Satya Nadella to declare that the era of propping up the platform is finished. To survive this step change, Xbox plans to close or sell off studios, including Ninja Theory, the maker of the acclaimed Hellblade series.
But the cuts are only part of a category killer crisis, as a severe hardware component shortage has left Microsoft unable to build enough consoles to meet player demand. To offset these crippling manufacturing bottlenecks, the company is preparing a steep $100 to $150 price hike on its physical consoles.
As the hardware business falters, Xbox is aggressively pushing its Game Pass subscription and releasing major titles on rival platforms from Sony and Nintendo.
