Xbox has had a rough year. Leadership has flip-flopped on exclusives, shut down multiple first party studios, carried out mass layoffs, and cancelled multiple games. It’s also facing active BDS boycott due to Microsoft’s ties to the Israeli military. But simple economics may be Xbox’s undoing. The aggressive price increases on Xbox hardware and subscription services have made the broader Xbox ecosystem — Game Pass, Series consoles, ROG Ally handhelds, and the Microsoft Store — increasingly unappealing.
Xbox products are simply too expensive. An Xbox Series X in the US costs $100 more than a PS5 and $200 more than a Switch 2. The upcoming Xbox co-branded ROG Ally X sells for $999, roughly double the price of the market-leading Steam Deck. That’s a problem when Xbox has a smaller game library and customer base than Steam, PlayStation, and Nintendo.
Even with those disadvantages, Xbox’s primary selling point has been their game subscription service Game Pass Ultimate (GPU). While rival services from Nintendo, Sony, mainly feature older games, GPU offers many big budget PC and console titles, including all of Microsoft’s first party lineup, on day one. But GPU now costs a prohibitive $30 per month. That’s the same cost as five full price games over a year, a steep ask when most gamers spend far less on their hobby.
$30 a month prices GPU higher than other mainstream monthly subscription services. Music streaming on Spotify or Apple Music runs around $12, while most movie and TV streaming services offer premium tiers around $20. Given GPU invites natural comparisons to Netflix and Spotify, its high price will likely further dissuade potential audiences.
Even if a $650 console, $999 handheld, and $30 subscription seemed reasonable, the sheer speed and magnitude of the price increases has generated considerable sticker shock. The five year old Series X is now 30% more expensive, even though consoles historically get cheaper over time. GPU’s price rose 50% (from $20 to $30) and effectively doubled (from $17 to $30) in just 14 months. I can’t recall any digital subscription service increasing its prices as aggressively.
The odd timing of these announcements makes matters worse. Microsoft increased the price of its consoles, Game Pass, and revealed the high price for its ROG Ally X all within a month. These back to back self inflicted negative PR cycles are happening just weeks before the holiday shopping season and the launch of some of Microsoft’s biggest first party games like Call of Duty: Black Ops 7 and The Outer Worlds 2. The result is a marketing strategy that feels defensive and directionless.
Microsoft and its defenders would argue GPU provides more value than before: higher quality cloud streaming, the Ubisoft Classics catalog, Fortnite Crew, and the promise of even more day one games. None on the additions however, appeal to more than niche audiences and they fail to justify a $10 price increase.
Microsoft’s price increases also mirror larger industry trends. Inflation, tariffs, and slowing growth have incentivized gaming companies to extract higher value from their existing customer base. Sony and Nintendo have increased the prices of their consoles, accessories, and games. PC components, especially graphic cards in the midst of the AI boom, have also surged in cost.
Yet no gaming ecosystem exists in a vacuum. Relative value matters most over the long run. Value impacts casual gamers looking to buy a current generation console to play GTA VI. It also informs enthusiasts that already own every gaming platform on where to invest their future time and money.
It’s on this competitive landscape that Xbox has fallen far behind. With hardware that’s largely indistinguishable from competitors and a shortage of standout exclusives, only a narrow group of gamers will find the premium for Xbox products justifiable: heavy Game Pass users who also regularly play Fortnite, Xbox whales who are price insensitive, and cloud gaming super fans. Most players won’t.
Admittedly, years from now the gaming landscape will shift and fragment in ways none of us can predict. Xbox’s massive scale, breadth of studio talent, and strong server infrastructure could weather a future where gaming shifts away from consoles and beefy PCs to mobile and cloud. But reaching that future demands vision and investment. Xbox’s recent price hikes suggest it has neither.