Xbox economics: Microsoft may be losing up to $200 per console

According to insider Jez Corden, Microsoft is facing growing losses on sales of Xbox Series X|S consoles. In a recent Windows Central podcast episode, he said the company could be losing up to $200 on every console sold. This does not look like a short-term discount effect, but a deeper problem: components are getting more expensive, while player behavior is changing.

Corden says Xbox production costs are being pushed up by pricier memory, higher prices for key components, tariffs and supply-chain disruption. At the same time, the old console model, where hardware is sold at a loss and the money comes back through games and subscriptions, is working less reliably. More users now spend most of their time in free-to-play games such as Fortnite and Roblox, while spending little inside the Xbox ecosystem.

If the console really is sold at a loss of up to $200, Microsoft needs each buyer to spend a similar amount later on games, services or digital content. For part of the audience, that could take years. Corden believes both Microsoft and Sony are already trying to reduce the risk by cutting console shipment volumes and carefully raising retail prices to offset rising production costs. Microsoft previously announced that it would raise Xbox Series X|S prices worldwide from August 1, 2026 and discontinue the 2 TB model.

Corden also discussed the next-generation Xbox, codenamed Project Helix. According to him, Microsoft’s current plan does not include a built-in disc drive. The insider says the economics of manufacturing drives have become much worse: with current costs and falling interest in physical copies, a built-in drive is becoming a less justified part of the console.

As a compromise, Microsoft could release an external USB disc drive, but even that option is not guaranteed yet. The Verge previously reported that the company has not made a final decision on a drive for Project Helix and is also testing a feature that would convert physical Xbox One and Xbox Series X|S games into digital licenses.