Microsoft announced a third Xbox price increase within 13 months, effective August 1, 2026, and will discontinue the 2TB Xbox Series X model worldwide [1, 2, 3, 4, 5, 6, 7, 8, 9]. The company said the rising costs of storage and memory chips, driven by demand from AI data centers, forced the adjustments [1, 2, 3, 4, 5, 7, 8, 9]. "We hoped another price increase would not be necessary," Microsoft said. "Console storage and memory prices have increased by more than 2.5x and we expect another doubling by the fall of 2027" [3].

The new prices raise the Xbox Series S 512GB model from about $399 to $499, a $100 increase, while the 1TB model will rise from roughly $449 to $599, a $150 boost [1, 3, 10, 6, 7, 9]. The Xbox Series X 1TB Digital edition will jump from $599 to approximately $750, and the 1TB disc drive model from around $649 to $800 [1, 3, 10, 6, 7, 9]. The 2TB Series X model will no longer be available [1, 2, 3, 4, 5, 6, 7, 8, 9].

Unlike most consumer electronics, Microsoft sells Xbox consoles at or below manufacturing cost. "The entire consumer electronics industry is struggling," Microsoft said, "but consoles are typically not sold at a profit, but for less than they cost to make" [4]. Microsoft reported that gaming accounted for about 8% of company revenue in fiscal year 2025 amid restructuring due to declining Xbox sales [1].

To help customers with affordability, Microsoft is launching Buy Now, Pay Later options with interest-free financing through Amazon. It also plans certified refurbished consoles and has partnered with retailers for used console resales and trade-ins for cash or credit [2, 3, 4, 10, 6, 7, 9]. "Players ready to upgrade or no longer using their console will be able to trade it in for cash or store credit," Microsoft said, with those consoles resold at lower prices [6].

Sony and Nintendo have also raised console prices under similar component cost pressures, while Valve launched its Steam Machine above $1,000 citing inflation in parts costs [1, 2, 4, 7, 11]. The Xbox price hike comes ahead of anticipated demand for GTA 6’s November 2026 release [3, 6].

Microsoft’s previous Xbox price increases came in May 2025 globally and in October 2025 in the U.S. only [1, 2, 3, 10, 5]. The new prices and discontinuation of the 2TB model take effect worldwide on August 1, 2026 [1, 2, 3, 4, 5, 6, 7, 8, 9]. Storage and memory costs are forecast to double again by late 2027, according to industry analysts [1, 2, 3, 4, 5, 6, 7, 8, 9, 11].