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Wednesday, March 29, 2023

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Phil Spencer admits Xbox won't be able to avoid price hikes forever

Microsofts head of gaming Phil Spencer has discussed possible price increases across the Xbox line, acknowledging that while the company has so far maintained prices for its consoles, Game Pass, and games, it will “at some point…have to raise the price on certain things”.

Speaking at the Wall Street Journals Tech Live (thanks The Verge), Spencer admitted, “Weve held price on our console, weve held price on games and our subscription. I dont think well be able to do that forever… I do think at some point well have to raise some prices on certain things, but going into this holiday we thought it was important to maintain the prices.”

Earlier this year, of course, Sony announced it would be increasing the cost of PlayStation 5 in response to “high global inflation rates, as well as adverse currency trends”. At the time, Spencer said Xbox would not be following suit, explaining, “When our customers are more economically challenged and uncertain than ever, we dont think its the right move.” Given Spencers latest comments, though, its unclear how long that might last.

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Elsewhere in his Tech Live chat, Spencer revealed some interesting tidbits about Xboxs various services, including the news that Game Pass is now profitable, despite growth beginning to slow on consoles – a situation Spencer says is “mainly because at some point youve reached everybody on console that wants to subscribe”.

While new console subscriptions maybe slowing, Game Pass on PC is said to be “seeing incredible growth”, and Game Pass as a whole now accounts for around 15 percent of Microsofts overall Xbox content and services revenue – a figure Spencer believes is likely to hold. “I don’t think it gets bigger than that,” he explained, “I think the overall revenue grows so 15 percent of a bigger number, but we dont have this future where I think 50–70 percent of our revenue comes from subscriptions.”

Spencers comments come a day after Microsoft revealed its Xbox hardware revenue has grown by 13 percent, making for the gaming divisions best ever Q1 results. A three percent fall in Xbox content and services revenue was said to have been “partially offset” by growth in Game Pass – with “more than 20 million people” now having used the service to stream games.

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