Microsoft delays Streaming-only consoles due to cost concerns

Xbox boss Phil Spencer wants the new console to have a $99 to $129 price point.

Microsoft has been relying heavily on its Xbox Game Pass subscription of late. The company has been looking for ways to capitalize on the service that generated over $2.9 billion last year.

Microsoft has put the development of the Xbox Keystone on hold.

Last summer, Microsoft announced that it was developing a standalone device that could stream Xbox games to TVs or monitors. This device was codenamed "Keystone" and was designed to eliminate the need for a dedicated console to play games.

Phil Spencer, Microsoft’s Head of Gaming, recently spoke to The Verge about the device and revealed that some employees got the chance to test it at home. Spencer even teased the device when he shared a photo of his office last month.

It did work well when it was tested, but proved too costly to produce. "The console we built that now people have seen, Keystone, was more expensive than we wanted it to be when we actually built it out with the hardware that we had inside, and we decided to focus that team’s efforts on delivering the smart TV streaming app," Spencer reveals.

The concern about pricing stems from the existence of the budget-oriented Xbox Series S. "With Keystone, [we’re] still focused on it [and] when can we get the right costs, but when you’ve got Series S at $299, and like during the holidays you’ll see some price promotion, you’ll obviously have Series X higher, I think in order for a streaming-only box to make sense, the price delta to S has to be pretty significant."

Spencer wants Keystone to ship with a controller.

Spencer shared that he intends for the new device to have a controller. Currently, the most basic Xbox controller retails for $39.99. The higher-end and customizable controllers such as the Xbox Elite Wireless Controller Series 2 cost upwards of $153.99, saying:

I don’t want to announce pricing specifically, but I think you’ve got to be $129, $99, like somewhere in there for that to make sense in my view, that we just weren’t there. We weren’t there with the controller. And I love the effort. The reason it’s on my shelf is the team rolled up their sleeves and in nine months they built that thing. And a bunch of us took it home and it worked. It worked really, really well," Spencer explains during the podcast.

Microsoft will find it difficult to achieve the price point that Spencer wants and still include a controller, especially with the ongoing chip shortage. If the device had a controller then the tech giant will have to find a way to produce the device at $80. It has always been known that Microsoft does not profit from selling devices and only recoups costs through its Game Pass subscription service.

The pricing for the streaming-only device should be significantly lower than the Xbox Series X.

He also revealed that he intends for the device to look and feel like an Xbox device and that the silicon choice is what kept them from hitting the ideal price point.

"But we made some decisions to make it easy. The thing, when it is turned on, it looks like an Xbox, the user interface, everything works, but some of the silicon choices that we were making at the time we were designing just didn’t let us hit the price point that we wanted to hit."

Spencer also thinks that the device will be "years away" from rolling out.

Speaking of Microsoft, the console manufacturer just revealed a new Xbox Series S bundle. Finally, Spencer revealed that he's very open to keeping Call of Duty on the PlayStation platform.

Darryl Lara

Darryl has been gaming since the early 90s, loves to read books and watch TV. He spends his free time outside of gaming and books by riding his motorcycle and taking photographs. You can find Darryl on Instagram. Check him out on Steam and Xbox too.
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