Are Xbox sold at a loss?

Microsoft loses up to $200 on each Xbox console it sells. Speaking at the WSJ TechLive event on 26th October, Xbox head Phil Spencer admitted its Xbox Series X/S consoles are sold at a loss, with the expectation that revenue will be made up elsewhere on accessories and games.

eurogamer.net - Microsoft loses up to $200 on each Xbox console sold | Eurogamer.net

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Microsoft loses up to $200 on each Xbox console it sells.

Speaking at the WSJ TechLive event on 26th October, Xbox head Phil Spencer admitted its Xbox Series X/S consoles are sold at a loss, with the expectation that revenue will be made up elsewhere on accessories and games. "Consoles as a business model, in the overall scope of gaming, is fairly small relative to the places people play. Consoles evolved to a business model much different from phones where consoles are actually sold at a loss in the market," he said. "So when somebody goes and they buy an Xbox at their local retailer we’re subsidizing that purchase somewhere between a hundred and two hundred dollars, with the expectation that we will recoup that investment over time through accessory sales and storefront."

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Of course, console manufacturers often sell consoles at a loss - with the usual exception of Nintendo. It's a widely accepted business practice to then recoup money elsewhere, such as from software sales (where platform holders take a cut) and subscriptions, such as Xbox Games Pass. But Spencer's comments take on new meaning in the context of current console prices. Last week, the Xbox boss said the company won't be able to avoid price hikes forever. "We've held price on our console, we've held price on games and our subscription. I don't think we'll be able to do that forever... I do think at some point we'll have to raise some prices on certain things, but going into this holiday we thought it was important to maintain the prices," he said. Back in August, Sony announced it would be increasing the price of its PlayStation 5 console in an unprecedented move, which it blamed on inflation. At the time, Spencer said Xbox would not be following suit. Yet with consoles sold at such a loss, perhaps this won't be the case after the holiday period. Spencer did admit that he doesn't think Microsoft will be able to keep game prices constant forever, but they do provide long hours of entertainment. "People can play video games for hundreds of hours," he said.

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How much is too much gaming?

While research suggests that behavioral issues can start to appear with children who play more than nine hours of video games a day – one hour on weekdays, two on weekends – many parents look for common signals that their child is playing too many video games, including: Irritability when not allowed to play games.

youthclinic.com - How Much is Too Much Video Game Time for Kids? - The Youth Clinic

A lot of that answer depends upon your family’s culture. Some parents prefer children to stay active, and sharply curtail screen time, while others take a more liberal approach. While research suggests that behavioral issues can start to appear with children who play more than nine hours of video games a day – one hour on weekdays, two on weekends – many parents look for common signals that their child is playing too many video games, including:

Irritability when not allowed to play games

Preoccupation with next gaming session or game storylines

Fatigue caused by trading sleep for game time

Social isolation – choosing to play games over socializing with friends and family

Lying to conceal time spent gaming

Loss in interest in school work or other activities

Regardless of how many hours your child spends in front of a screen, these behaviors are signs of a budding video game addiction. Many parents put strict time limits on video game time, and place consoles and computers in public parts of the home to monitor that time. Consider leaving the large platforms – Xbox, Wii, etc. – out of your home to keep children insulated from game marketing that feeds these behaviors.

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