Xbox is in a rebuilding phase. The platform’s leaders have repeatedly made clear that “console” remains “core” to Microsoft’s gaming business. But according to a new report from Fortune, those consoles are about to start costing as much as $1,800 if the tech giant declines to subsidize next-gen hardware.
“As it stands, the price of the Helix console has internally been projected to cost consumers between $1,200 and $1,800, unless Microsoft decides to subsidize the cost,” the report states. Microsoft has traditionally subsidized its hardware, much more so than Nintendo and Sony, but living room gaming devices have also never cost this much before. The PS6 is reportedly facing similar pricing pressures.
Xbox CEO Asha Sharma has called “affordability” one of the key challenges facing Project Helix as the AI race eats up all available supplies of memory and storage, even if some of the finished server racks for all of the data center buildouts are completely idle right now. It’s such a big obstacle that Microsoft is even having trouble keeping the existing Xbox Series X/S consoles stocked in stores despite massive price hikes over the last 12 months.
One thing that traditionally helps platform holders subsidize hardware to make it more affordable is all of the commissions it collects on third-party sales. Sony generates hundreds of millions in revenue this way from games it doesn’t even make. But that upside shrinks if the console install base struggles to grow, as Xbox’s has this console generation.
“Consoles as a business model, in the overall scope of gaming, is fairly small relative to the places people play,” former Xbox boss Phil Spencer said back in 2022. “Consoles evolved to a business model much different from phones where consoles are actually sold at a loss in the market. So when somebody goes and they buy an Xbox at their local retailer we’re subsidizing that purchase somewhere between $100 and $200, with the expectation that we will recoup that investment over time through accessory sales and storefront.”
Even if Microsoft were willing to continue spending hundreds per console sale to subsidize the price, it’s not clear if that would put much of a dent in the price of a next-gen machine that would otherwise cost $1,800. And according to the companies that manufacture RAM, component prices are only going to go higher in 2027 and 2028.