Xbox to raise prices and Game Pass could be the first in line

Xbox gaming head Phil Spencer admits that Microsoft may eventually have to raise prices on its video game products and services, Xbox Game Pass should be the first in line for a cost bump.

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Not everyone is ready to charge $69.99 for new-gen games, but how long can the holdout last against rising inflation costs? Companies like Xbox, Nintendo, SEGA and Capcom have resisted charging more for their games. At yesterday's Wall Street Journal Tech Live event, Phil Spencer says that eventually Xbox may have to increase prices of its games, hardware, services and/or content.

The price hike won't happen this year, though. Microsoft doesn't want high prices to impact their critical holiday period--last year Xbox made a record-breaking $5.44 billion during the holiday and Microsoft is eager for more of that growth. So far FY23 is off to a great start with record Q1 highs of $3.61 billion revenues.

"We have to look at the return on our business, the cost of our business. We've held price on our consoles, on our games, and our subscription. I don't think we'll be able to do that forever. I do think at some point we're going to have to raise prices on certain things, but going into this holiday we thought it was really important that we maintain the prices that we have," Spencer said, as capture by The Verge's Tom Warren.

"Consumers are more uncertain right now than they have been in a long time, and I want our medium of video games to be something that they find attractive."

Xbox Game Pass is the most likely culprit to see a price hike, especially if the Activision-Blizzard merger closes.

Once Microsoft owns Activision-Blizzard it will be able to fold 8 billion-dollar IPs into Xbox Game Pass, but they can't add Call of Duty to Game Pass before the existing Sony deal expires in 2024.

Game Pass value, which is already tremendously high due to the 400 games offered on both PC and console, is set to surge with the addition of these powerful new games. I had predicted that Call of Duty alone would be enough justification for Microsoft to introduce a new Xbox Game Pass pricing tier.