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Tech giant raises console and subscription costs as industry grapples with tariffs and inflation
REDMOND, WA – Microsoft has announced sweeping price increases across its Xbox ecosystem, marking the first major adjustment since the launch of its current-generation consoles. Effective May 1, 2025, the new pricing structure affects hardware, accessories, and Game Pass subscriptions worldwide—a move analysts attribute to rising production costs and recent U.S. tariff policies.
Key Pricing Changes
- Xbox Series X: Jumps from 499.99 to 599.99 in the U.S.
- Xbox Series S: Rises to 379.99 (up 80 from launch price)
- Game Pass Ultimate: Increases from 14.99 to 16.99/month
- First-party games: Will now retail at $79.99 later this year
International markets face similar adjustments, with India seeing Game Pass Ultimate rise from ₹499 to ₹549/month. While Microsoft hasn’t confirmed India-specific console price hikes, the Xbox Series X already sells for ₹55,990–59,990 (with bundles).
Tariffs and Supply Chain Strains Drive Costs
The price surge coincides with new 145% U.S. tariffs on Chinese-made electronics—a critical factor given most Xbox consoles are manufactured in China. Though Microsoft hasn’t directly blamed tariffs, industry experts note the unavoidable cost impact.
Competitors are also adapting:
- Sony has raised PS5 prices in select markets
- Nintendo shifted some production out of China
Game Pass Controversy
The FTC has criticized Microsoft’s revised subscription tiers, calling the new Standard plan a “degraded product” for excluding day-one first-party game access. The agency links these changes to its earlier concerns about Microsoft’s Activision Blizzard acquisition.
Strong Financials Despite Headwinds
Microsoft’s gaming division remains profitable, reporting $70.07 billion revenue last quarter, powered by franchises like Call of Duty and Minecraft. However, the price hikes signal a broader industry shift as companies pass rising costs to consumers.
The Bottom Line:
With inflation, tariffs, and supply challenges reshaping the gaming landscape, Microsoft’s pricing realignment may be just the beginning of a more expensive era for gamers worldwide.
