Why is Xbox so expensive right now?
Put simply – the new Xbox Series X and Series S consoles are expensive because supply is extremely limited and demand is very high. This severe imbalance has driven prices upward, to the great frustration of gamers.
The Global Semiconductor Shortage
The key reason behind both shrinking Xbox supply and rising costs is the worldwide shortage of semiconductors ever since 2020. Game consoles require advanced specialized chips that are also used in many other technologies like smartphones and cars. With chip manufacturing still lagging despite pandemic recovery, production of Xbox units has been badly hampered.
| Year | Total Xbox Sales |
|---|---|
| 2020 | 11.6 million |
| 2021 | 6.7 million (estimate) |
As this table shows, estimated Xbox sales dropped significantly last year, largely due to supply issues. The global chip scarcity has been a primary constraint on Microsoft‘s ability to assemble more Xbox consoles. And economists feel the semiconductor supply crunch could last through 2023 or longer.
Challenging Manufacturing & Distribution
The sophistication of the Xbox Series X and S advanced hardware makes assembling and distributing these consoles intrinsically complex even in normal times. The global supply chain crisis has further hardened these logistical issues across manufacturing, freight, and delivery – slowing Xbox production and inventory replenishment.
In 2022, Microsoft reportedly paid nearly $2 billion for priority access to custom processors from chipmaker AMD to help increase future Xbox output. But ramping up fabrication of cutting-edge console processors and flash memory remains difficult amidst lingering pandemic impacts and materials shortages.
Getting completed Xbox units shipped out globally once built has also proven just as troublesome during recent supply chain turmoil. All these distribution headaches combine to restrict Xbox availability in many regions.
Xbox Demand Hits New Highs
While challenged by shortages on the supply side, Microsoft simultaneously faces soaring demand for its latest consoles. The Xbox Series X touted as the "world‘s most powerful console" has strongly appealed to gamers ready to upgrade from past Xbox and PlayStation generations.
Research firm D.F.C. Intelligence forecasts total Xbox Series X/S sales reaching 72 million units by 2026 – which would surpass the Xbox One‘s lifetime sales that span almost a full decade. This indicates immense ongoing demand for the advanced new Xbox hardware.
Rampant Reseller Markups
The huge gulf between limited supply and sky-high demand has created fertile ground for excessive Xbox price hikes by opportunistic resellers. Rather than gamers themselves buying consoles at retail value, scalpers employ bots and quick clicks to snatch up what little Xbox inventory exists – often wiping it out within seconds.
These consoles then get resold at massively inflated prices on secondary marketplaces like eBay or Craigslist. Examples include:
- Xbox Series X $999 bundle listed on Walmart resold for $2,100
- Xbox Series S marked up from $299 to $599 on Etsy
- StockX data showed average Xbox Series X price at over $760
Such extreme markups let resellers capitalize on the Xbox supply and demand imbalance at the expense of gamers trying to buy new consoles.
Impacts on Gamers
The outcome of Xbox scarcity and costs staying so high is increasing financial strain for gamers looking to upgrade to next-generation gaming. Those refusing to pay inflated secondary market prices are left endlessly tracking restocks that sell out almost instantly.
Many instead opt for Xbox All Access, which offers new consoles at retail price with 24-month financing plus Xbox Game Pass Ultimate. But these commitments still add up – a Series X All Access bundle currently costs $840 total once paid off.
| Console | MSRP | All Access Total | Markup Pricing |
|---|---|---|---|
| Xbox Series X | $499 | $840 | $700-$1000 |
| Xbox Series S | $299 | $528 | $500-$700 |
This table lays out how much more expensive it is for gamers to acquire new Xbox consoles, whether paying one lump sum or spread out through All Access. The many complaints and memes directed at the Xbox pricing situation demonstrate gamers‘ huge frustration even years after launch.
When Will Prices Come Down?
Both analysts and Microsoft itself expect the Xbox production shortfall to continue limiting supply at least through late 2023. Major chip fabricators like TSMC are racing to expand capacity, but not likely fast enough to substantially ease the Xbox scarcity. As demand also stays high with big game franchises like Starfield exclusive to new Xbox units, costs are likely to remain elevated.
In my assessment as a gaming industry expert, Microsoft will maintain focus on building up inventory rather than offering discounts that could shrink margins and dampen All Access momentum. For the next 12-18 months, expect Xbox prices to hold mostly firm barring occasional bundled offerings adding extras. By 2024 we could see general retail price reductions or bundled deals as supply normalizes.
In the meantime, persistently monitoring retailer listings and the Xbox availability tracker remains gamers‘ best way to catch occasional inventory drops closest to MSRP. Acting fast is key – but eventually improving semiconductor manufacturing fundamentals should make the latest Xbox consoles both more attainable and affordable.
