Xbox’s fresh-faced CEO, Asha Sharma, has taken over the gaming division at an unenviable time. Rising costs of RAM and storage have forced Microsoft – and its competitors Sony, and Nintendo – to increase prices to previously unseen levels.
The continued increase in price not only makes owning the hardware unattainable for millions of people, it also puts pressure on Xbox to find creative ways to offset the costs, and it sounds like the company has plans there.
During a recent interview with Fortune, Sharma was asked directly if it’s possible to grow the console business in the current crisis, especially as the company simply can’t keep raising prices to offset exploding costs.
“Yeah, look, in all of these spaces, there are no silver bullets,” she said. “So, we will have patience, and we will execute in days, but expect that it will take a while to show up on the scoreboard.”
“On hardware, we are in a crisis right now. The entire industry is, the costs are exponential. They are usually, at this point in the generation, about 50 percent of the [launch] cost, and we’re seeing they’re up 2.75 times,” she admitted.
“So yes, pricing is a lever, of course, but we must think about other options as well.”
Those options, according to Sharma, include finding ways to optimise the costs of building the console itself, and creating “different plans” to allow more people to “participate in the console”.
Xbox has actually experimented with offering subscription models for its console in the past. Xbox All Access was a programme that allowed players in the US, UK, and a few other countries to rent-to-own an Xbox Series X/S, paying a small monthly fee for a period of 24 months with no upfront cost. The scheme, which also included Game Pass, has since been killed, but it could make sense for it to return under the current circumstances.
More interestingly, Sharma hinted at something new potentially debuting later this year.
“We will continue to look at new business models. I think, [that] is what is needed for console, rather than just the most premium, high-performance console in the world,” she revealed.
“We’ve reached a point where it will be hard to imagine that mass audiences can afford thousands of dollars to spend on a console generation, and so I think we will start to see radically different business models that we never expected start to come into orbit later this year.”
Sharma didn’t elaborate on that last revelation, but it’s possible she’s referring to a sort of hybrid console that is primarily cloud-dependent, and won’t require sourcing expensive components to build.
Xbox did work on a streaming-based console at one point, but it never saw the light of day. There’s also been recent reports of an ad-supported tier of Xbox’s Cloud game streaming service, which may also see an official introduction later this year.
