Xbox Price Hike in U.S. Blamed on Macroeconomic Factors

A gamer plays soccer title Pro Evolution Soccer 2019 on an Xbox console.

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Microsoft (MSFT) announced Friday that it will be increasing the suggested retail price (SRP) of select Xbox consoles in the U.S., effective October. The tech giant cited “changes in the macroeconomic environment” as the primary driver behind the price adjustments.

In a statement released on its support website, Microsoft clarified that the price hike would not extend to Xbox accessories, including controllers and headsets. Furthermore, the company affirmed that pricing in other global markets would remain unchanged.

While Microsoft’s official statement refrained from explicitly linking the price adjustments to prevailing tariff policies, the move coincides with broader industry concerns regarding the impact of international trade tensions on consumer electronics. The elevated costs of components and manufacturing, particularly those sourced from overseas, are increasingly being passed on to consumers.

“We understand that these changes are challenging, and they were made with careful consideration,” Microsoft stated. The company emphasized its commitment to delivering compelling gaming experiences while navigating evolving economic realities.

This marks the second instance this year where Microsoft has adjusted console pricing in the U.S. market. Rival console manufacturers Sony and Nintendo have also implemented similar price increases in response to the economic pressures. The moves have sparked debate about the long-term impact on the gaming industry, pricing gaming potentially out of reach of casual gamers.

The specific price revisions, as outlined on Microsoft’s website, are as follows:

• Xbox Series S: The base model will now retail for $399, up from $379. A 1TB storage configuration is priced at $449.
• Xbox Series X Digital Edition: The disc-less model will see a $50 price increase, bringing the SRP to $599.
• Xbox Series X: The standard model with an integrated disc drive will also be priced at $649, reflecting a $50 increase.
• Xbox Series X (2TB): The premium version featuring 2TB of internal storage will be available for $799, a $70 increase.

Analysts at Wedbush Securities note that Microsoft’s pricing strategy reflects a nuanced understanding of the competitive landscape. While the increases may deter some price-sensitive consumers in the short term, the Xbox ecosystem, bolstered by the Game Pass subscription service, provides a compelling value proposition for committed gamers. It remains to be seen how the end-of-year holiday sale will affect units sales.