As game console hardware costs continue their upward trend, Xbox head Asha Sharma recently stated that Microsoft cannot solely rely on launching high-performance next-gen consoles. Instead, the company must seek new business models to make the console ecosystem more affordable and accessible to a wider player base.
In an interview with "Fortune," Sharma pointed out that console, component, production, and shipping costs have continuously risen in recent years. This surge is attributed to factors like global geopolitical situations, tariffs, logistics issues, and increased demand from AI data centers for critical components such as processors. Consequently, current-gen consoles like the PlayStation 5 and Xbox Series X/S have not seen the gradual price reductions typical of previous generations; instead, they have experienced multiple price hikes for hardware, accessories, and subscription services.
Discussing the future of console development, Sharma stated, "I think we're going to continue to think about new business models that are necessary for consoles, beyond just launching the highest-end, highest-performance console in the world."
"We've reached a point where it's hard to imagine the average player affording to spend thousands of dollars on a console generation. Therefore, I believe we will start to see some completely different business models, ones we've never anticipated before, entering the discussion later this year."
These remarks have sparked speculation about whether Microsoft might reintroduce a low-cost console option similar to the Xbox Series S, or further develop different models such as handhelds, hardware rentals, or subscription-based console plans. In the past, Microsoft offered installment plans for consoles bundled with subscription services through Xbox All Access. More recently, the company has also collaborated with Asus on handheld initiatives like the ROG Ally X.
"We have to rethink the cost structure of consoles from different angles," Sharma further elaborated, "designing more diverse solutions to allow more people to participate in the console ecosystem. At the same time, we also need to seek partnerships that can expand our channels and reach, and consider gaming experiences beyond the console to reach new player demographics."
However, Sharma also emphasized that Microsoft is still developing a next-generation Xbox console, currently codenamed Project Helix. She stated that this console will be able to play PC games, support backward compatibility, and feature leading-edge performance.
"Demand for our ninth-generation consoles has outstripped supply, and I expect the same for the tenth-generation," Sharma said. "This is a console that will also let you play PC games; it will have backward compatibility and leading-edge performance. However, there's a lot of practical work to be done to ensure that everyone who wants one can get it, and we are working on that."
As console prices gradually approach $1,000, balancing performance and price for next-gen hardware has clearly become a core challenge Microsoft must address.