Former Blizzard president blames Xbox price increase on declining profits, not tariffs
Mike Ybarra has never been shy about sharing his opinions on Microsoft’s gaming division. The former Blizzard president doesn’t believe tariffs justify the Xbox price increases. Instead, he claims that the company is compensating for slow console sales and low profits.
After raising the MSRPs of gaming systems and accessories in May, Microsoft recently announced more price hikes. Starting on October 3rd, the standard and digital versions of the Xbox Series X will cost $50 more. The Series S will also see a smaller $20 jump in price. Although the latest changes are exclusive to the U.S., asking $599.99-$649.99 for aging hardware is causing sticker shock.
On social media, Ybarra tried to reinforce his argument by noting the repeated Xbox price increases. Without another change in tariff rates, there is no reason to charge consumers even more. Still, as some replies explained, the situation is constantly evolving. Microsoft may not have accounted for all of its effects with the initial May adjustments.
The ex-Blizzard and Microsoft executive is facing backlash over his comments. Even so, some Redditors believe companies exploit tariffs. During the COVID-19 crisis, critics accused manufacturers of exaggerating supply chain issues. As with import fees, consumers ultimately suffer, but higher costs are not always warranted by the economic conditions.
How lackluster Xbox console sales may affect pricing
The most balanced response to Ybarra considers both declining Xbox console profits and tariffs. With its latest quarterly earnings, Microsoft Gaming reported overall growth. Unfortunately, hardware revenue fell by 22% compared to the previous year. Shifting to a multi-platform strategy, the company is likely no longer prioritizing Series X and S sales. Still, with another Xbox price increase, it hopes to counteract some of these losses.
Whether or not it’s necessary, the PlayStation may follow Microsoft’s lead in the U.S. It has already adjusted PS5 MSRPs upwards in regions including Europe and Japan twice in the past three years.
