Xbox CEO Asha Sharma is standing up on her soapbox, telling gamers what they don’t want to hear: gaming hardware is getting too damn expensive. Because of spiking memory prices, players may not be able to afford that shiny new console on the horizon. So Xbox has to do something drastic, and that may require rejuvenating Xbox Cloud Gaming with—you guessed it—ads.
The entire Xbox business is heading toward a “reset,” according to an open memo sent to Xbox employees co-written by Sharma and head of Xbox’s publishing arm, Matt Booty. The situation is dire. Microsoft’s gaming execs told staff that console storage components were already 2x more expensive than they were last fall. Xbox’s leadership expects memory prices to soar to 5x what the company had previously paid a year ago. That’s going to pose a problem for Xbox’s “Project Helix” next-gen console.
“While the entire industry is facing a components crisis, we believe we have been impacted more greatly than many of our peers due to the choices we made over the last half-decade,” Sharma and Booty stated in their letter to staff, setting the stage for potential staff cuts and a larger business restructuring next month. “We are currently unable to make as many consoles as players want to buy, and we need a new business model and partnerships for hardware as we remain committed to Helix.”
Whatever that means for the console, the next stage will also require rethinking how the company looks at its entire product stack—including Xbox consoles, PCs, and its Game Pass subscription. The recently installed head of Xbox’s strategy chief, Matthew Ball, told The Game Business that Xbox’s previous strategy of focusing solely on Game Pass had put the company behind its competitors, leading to more supply issues. Ball, citing industry sources, claimed that memory may be constrained by 30% to 40% going into next year. Because of that lack of memory availability, the Xbox chief strategy officer said the company was “rethinking” Project Helix “to make sure it is affordable.”
The real question is what is affordable in this day and age. The head video game industry analyst at Circana, Mat Piscatella, wrote on Bluesky that the majority of households that bought a console in Q4 2025, 53%, make $100,000 or more annually. To put that into perspective, U.S. census data says the median household income in the U.S. is around $80,000. The Game Business’ Chris Dring brought up those figures, though Ball did not directly address how much Xbox can expect most families to spend on a single console.
Xbox hiked console prices twice in 2025, and that was even before the cost of memory started to spike late last year. The Xbox Series X now costs $650 for the version with a disc drive, $150 more than it did at launch in 2020. That was before memory prices started to soar. In October last year, Xbox worked with PC maker Asus to push an ROG Xbox Ally X gaming handheld for $1,000. There’s a new ROG Xbox Ally X20 coming in 2026 with a prettier OLED display that Asus has already confirmed will cost even more. Just how much will depend on what RAM prices look like in the next six months.
According to Ball, Xbox could use advertising “to offer more affordable alternatives,” likely in the form of new Game Pass or Xbox Cloud Gaming subscription tiers. Ball related it to what you already see on streaming services like Netflix with its ad-based tiers (which, we should note, are really freaking annoying) compared to ever-more expensive ad-free tiers.
“The question is, are there opportunities for us to find cheaper products, different products, and different delivery models to allow the people who can’t afford, or wouldn’t try, or wouldn’t test to be onboarded to our properties and franchises?” Ball said.
We cannot expect to return to a previous age, when a modern console cost less than $500. Xbox’s strategy may be to offer more cloud gaming services as an on-ramp toward their console offerings. Just don’t expect that console to be anything but a luxury.
Read the full article here
