Microsoft has announced significant price increases for its Xbox Series X and Series S consoles, citing rising production costs driven by a global “components crisis.” The company also confirmed the discontinuation of its 2TB Xbox model as part of the changes, which will take effect from August 1.
According to Microsoft’s announcement, the price of several Xbox models will rise by between $100 and $150 depending on configuration. The Xbox Series S 512GB will increase from $399.99 to $499.99, while the 1TB version will rise to $599.99. The Xbox Series X Digital 1TB model will increase to $749.99, and the standard Xbox Series X 1TB will reach $799.99.
Microsoft said the decision follows sustained increases in the cost of key hardware components, particularly storage and memory. The company noted that memory prices have more than tripled in recent months and are expected to continue rising into 2027, placing further pressure on consumer electronics manufacturers.
“Unfortunately, console storage and memory prices have increased by more than 2.5x and we expect another doubling by the fall of 2027,” Microsoft said in a statement, adding that the entire consumer electronics industry is currently facing similar challenges.
The company also pointed out that gaming consoles are often sold at a loss or minimal profit, unlike most other consumer electronics, making them especially vulnerable to rising production costs.
Alongside the price increases, Microsoft outlined several consumer options aimed at easing the impact. These include buy-now-pay-later financing plans, interest-free installment options through retail partners, and expanded trade-in programs allowing users to exchange older consoles for credit toward new purchases.
Microsoft also said it would increase the availability of certified refurbished consoles, which will be sold through official channels at reduced prices compared to new units.
The pricing changes come at a critical time for the gaming industry, with expectations of increased demand ahead of major upcoming releases such as Grand Theft Auto VI. Analysts have warned that supply constraints could limit availability of next-generation consoles during peak demand periods.
The broader gaming hardware market has been under pressure in recent years. Competitors including Sony and Nintendo have also adjusted pricing strategies, reflecting rising manufacturing and supply chain costs across the sector.
Industry observers note that the shift signals a broader transformation in console economics. Microsoft gaming leadership has previously suggested that future business models may need to change significantly as hardware affordability becomes increasingly constrained.
Xbox leadership has described the current transition period as a “reset,” with a greater focus on balancing hardware costs, content investments, and long-term profitability.
Microsoft CEO Satya Nadella has also acknowledged the shift in consumer behavior, noting that more Xbox-related engagement and monetization is now occurring through external platforms, highlighting the need for the gaming division to adapt its business model.
As the industry navigates rising costs and shifting demand, Microsoft says it is working with retailers and financial partners to maintain accessibility while ensuring the long-term sustainability of its gaming ecosystem.