The Xbox Live Price Hike: Microsoft's Foray into the Cable-TV Pricing Model

Default_picture
Wednesday, September 01, 2010

Editor's note: I don't know what else to say other than Tobias' comparison is really astute. -James


Monday saw an announcement that the price of an Xbox Live Gold membership is going up. The new pricing schedule takes effect November 1st, with a one-year membership increasing from $50 to $60. Nerd rage quickly bubbled up across the Net, and some of it's totatlly justified

Larry Hryb, Director of Programming for Xbox Live, justified the price hike stating, "Since launching Xbox Live in 2002, we have continually added more content and entertainment experiences for our members, while keeping the price the same."

This is all true. When I first started on Xbox Live in 2005 it was specifically because I wanted to play games online. Since then, the advantages of Gold have grown. I get early access to game demos; I can use Netflix, Last.fm, Facebook, and Twitter in my living room; and I recieve weekly discounts on downloadable content. Moreoever, at this year's E3, Microsoft announced a partnership with ESPN in addition to Hulu Plus and AT&T U-verse support.

 

All of this content is supposedly inflating the price of Live Gold, a service whose core functionality is online gaming. This is a service that Microsoft's competitors and many gamers feel ought to be free. This is a service which has opened up more opportunities to advertisers while still charging a premium to its members. And this is a service that takes a cut from every peice of content sold in its online market. To me, the Xbox Live Gold service is starting to look a lot like cable TV.

If you subscribe to cable or satellite TV, you probably don't watch all the channels you get in your plan. You can choose how much to get for what price you want to pay to some degree, but you're always going to be subject to some amount of bloat that doesn't interest you in any given package. Xbox Live is starting down this path by broadening their stable of services to a point where everyone is going to find something don't care about. When Microsoft included these additional services in the initial lauch price, it was hard to find a reason to complain. Now the price is going up, but consumer choices are not.

As long as Live Gold remains the only avenue to play games online on Xbox, Microsoft will have a built-in audience for their premium subscription -- myself included. With all of these new services, Gold subscribers deserve more choices as to what services they can receive through Live and at varied price points. "Take it or leave it" is no longer sufficient. I've occasionally used Last.fm, I watch Netflix almost every day, and I've been salivating over Hulu Plus. But I have zero interest in ESPN, and I'd argue that the Xbox 360 and PS3 are the worst platforms for using Facebook and Twitter. I should have the prerogative to opt out of some of these "channels" (going with the cable comparison) that I don't need, and Microsoft should adjust the price of my subscription accordingly.

Xbox Live brings a lot to the table, but it's starting to put things on the plate that not everyone ordered. Give your consumers better choices, and we'll keep coming back for more of what's best for us.

 
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Comments (21)
Default_picture
August 31, 2010
Sad part is to use a paid netflix subscription you have to be a gold member which sucks as well. Then again it is what you pay for. As I play for free on the ps3 ,but with not so much bells an whistles like party chat on xbl
5211_100857553261324_100000112393199_12455_5449490_n
August 31, 2010

No.  I'm sorry, but I'm gonna have to call "Are you serious?"  Ten dollars a YEAR.  That's less than a dollar a month.  If you can tell me with a straight face that operating Xbox Live hasn't increased in price more than a dollar since its inception, I'll let you have this argument, naysayers, mostly because at that point I would know what sort of people I'd be arguing with.  There is no "supposedly inflating" of the price here; it IS more expensive.  If you can't pay another 80-some-odd cents for Xbox Live a month, I guess Microsoft didn't really have your business in the first place.

I notice the write-up left out the part where Microsoft is currently giving people the option to buy a year's worth of Xbox Live for $40 as what equates to be an apology.  You'll note they're losing ten dollars per sub sold in this manner.

I honestly laughed when I heard about the price hike because I knew it wouldn't take two days before people started complaining.

Default_picture
August 31, 2010

Yes, it's a small price, but it's also one that nobody asked for to cover services you might not want. I'm asking if Live users should get more choices as to how to get their service; more than "take it or leave it."

Phantom
August 31, 2010

$10 isn't too steep. But I don't use many of the features on XBL. A few more options for consumers would be  cool.

And I didn't know that you could renew now for $40. That evens everything out nicely.

5211_100857553261324_100000112393199_12455_5449490_n
August 31, 2010

@Nick: Yes, I'm noticing many people writing about this aren't mentioning that.  And Tobias, I agree to a point.  I have not and probably never will use Facebook or Twitter or what have you on the Gold sub.  I'm also willing to bet that they are not the sole culprits of the "price hike" in the services.  How long has the price stayed static now?  Costs of operation have not dropped, and wether they were due in part or in majority to the additions made to the service is pure speculation.  Can you show me proof that this is the cause for increase in subscription fees?

Default_picture
August 31, 2010

@Bryan No, I can't show proof, though Microsoft hasn't been very forthcoming with that info. Major Nelson's statement yesterday was about how many services they've added while keeping the price the same, and from that I took the implication that new upcoming services are motivating the change. I'm not aware of any statements they've made that explain exactly why they are going to charge more money. I don't know what it costs to run their servers or exactly how much they make from their cut on sales made on the XBLM. I wish I did. And while I think that a sale on memberships is great, and I plan to take advantage of it, don't forget that this is their new permanent pricing which will be in effect for all future users, including anyone buying a new 360 this holiday.

What I really would like to see is Microsoft doing the customer a solid and allowing more choices in how to receive Live. If some of these added services are worth more money, should we have the option to turn some of them down, or should Live Gold remain all-or-nothing?

Default_picture
August 31, 2010

Maybe they will stop running those commercials on my dash board now. The only problem with the discount membership is that it auto renews. I know a few people that have had problems related to cancelling the service after their box RRODed. Hell has anyone tried to delete their credit card tied to a Gamertag? It's worse that pulling your own teeth out with a wrench. I had an clue somthing was amiss when the 12+1 month cards turned into 12 month. While I'm not happy about a price increse when I don't think I'm getting any added value, maybe it will curb the booster accounts and other mayhem that will take place in the Halo: Reach multiplayer...hopefully.

5211_100857553261324_100000112393199_12455_5449490_n
September 01, 2010

I really don't know.  Honestly, the only way I see everyone being happy is reverting online play to silver-level subscription; from here, any other move is another step in the wrong direction to anyone saying anything about the matter, and the suggestion I just made would be devastating to their bottom line.

I think, at the core, The Xbox Live Gold subscription, currently, is probably THE most complete online offering you can pay money to access.  Every bit of purchasable DLC (save game addons) has a trial/demo download, all hosted by Microsoft at all hours of every day.  You have voice-chat and text-chat.  You have (arguably should-be-free) access to Netflix, Twitter and Facebook? not sure on the last one... 

Short of offering a HEAVILY discounted online-play-only package, any sort of further divvying-up they might attempt would probably be met with some degree of dissatisfaction to the consumer base.

The current framework has been up and live and running and charged for since the 360's inception, and people either subscribed, or they haven't.  The services offered continued to grow and grow, and the only reason people have complained about that is because, now, some years later, Microsoft's asking them to pay another 85 cents a month.

This has just been blown completely out of proportion.  Pick two days out of this week to forgo your mocha-lattes and bam, you just made the price difference for the year.

Can you do that?  Is it too hard?  Or has Xbox Live been such a crappy deal that tacking 85 cents on each month suddenly and boldly crossed the line?

Default_picture
September 01, 2010

I'd just like to point out that despite the Canadian and US dollar being so close they regularly overtake each other, we still pay $10 more in Canada because that is the way it has always been and nobody wants to change it.

Jason_wilson
September 01, 2010

Microsoft hasn't raised prices for Xbox Live since 2002. How many other subscription services can say this? My cable has increased nearly every year since 2002. So Microsoft isn't allowed to increase prices after 8 years? Also: If you don't like the price increase, play PC games. No charge for multiplayer. 

Jamespic4
September 01, 2010

@Jason Tobias isn't complaining about the price increase. He's concerned that the increase is largely due to the unasked for services that Microsoft has been implementing over the last two years and the fact that he has to pay for ALL these services just to play online (since Silver members can't).

Essentailly Microsoft is saying "Pay $60 for 10 different services even though all you want to do is play online and dowload XBLA games." I think Tobias is totally right. Microsoft should have scaled pricing instead -- that or free online multiplayer.

Raising the cost for the total package is totally fine. They can charge $1,000 for all I care. But no one would pay for their top-tier service as long as it cost more than the others because no one wants to use Facebook on a Xbox. Everyone -- and I mean literally, nearly everyone -- would opt out of a package that includes Facebook and Twitter. On an Xbox, those two services are next to useless.

And that's why Microsoft will continue to only offer one point of entry for online gaming: so they can sell you a bunch of other bundled crap no one cares about.

100media_imag0065
September 01, 2010

I agree. I do not want to pay for features I do not give a crap about. Facebook? I don't give a crap. Twitter? I don't give a crap. ESPN? I don't give a double crap. Last F.M.? I don't give a tripple crap. Game room, Zune Marketplace, redesigned dashboard, etc. I. DO. NOT. GIVE. A. CRAP!!! Why is the price I am paying going up for features I do not touch?

Unless they are adding features I care about, I should not have to pay it. Hence why I am not renewing my subscription. I can get everything and more on PSN for free.

Default_picture
September 02, 2010

I don't use any of the added features to live, but I've been playing since the days of halo 2, and 10$ more seems reasonable. So long as the price of a year NEVER goes above that of the going rate for a game.

Profile_pic4
September 03, 2010

$10 increase in 7 years?  I can deal.  Already nabbed the $40 renew, too.

 

I can honestly say I have used nearly every feature on XBL.  Gaming?  Totally.  Netflix?  Nearly every day since it was offered.  Facebook?  Sure, why not.  Heck, I even streamed Lastfm during a birthday party last month.

 

I feel there's a lot of value there, and it just plain WORKS.  So yeah.  I can deal.

 

This doesn't take away from this post and an excellent analogy, Tobias.  I never thought of XBL in this way, and I'd say you make a good comparison.  There are some whiners who need a "basic cable" price STAT!

5211_100857553261324_100000112393199_12455_5449490_n
September 03, 2010

Obviously this pricing thing works out for them; otherwise Silver would have defaulted back to free online play a LONG time ago, back when the PS3 hit the shelves.  There's a reason XBL is still a play-to-play feature, and it's something a lot of people don't seem ready to admit: The package, as a whole, is worth it.

 

The price increase does make it feel like Microsoft's sticking a knife in the side and saying "So there", but seriously.  Eight years, no price hikes, no complaints.  The service evolved a lot, no complaints.  They ask for your milk money and suddenly people want options...

 

I can see why people are upset.  I just don't share their opinion that the service is no longer worth the asking price.  If people weren't being so passionate about it, I'd think nobody actually enjoyed the services until now, but they obviously are, and have.

100media_imag0065
September 03, 2010

@ Bryan.

 

I disagree. You claim people don't want to admit that Xbox Live is "worth it", but that couldn't be further from the truth. It isn't worth it, at all. What do they have that is worth me paying so much money for? Netflix? I can get that on my PC and PS3 for free. Twitter? Facebook? Last F.M.? ESPN? All things I can get free elsewhere. Why am I paying for these features that are free everywhere else?? Even better, why are the fees I was already paying now increasing by 20% for features I do not use and never asked for.

 

Xbox Live is supposed to be about the games. Yet now I am paying so other people can watch ESPN and twitter their life away? Why? It is an Xbox 360. Not a TwitFaceEspnFm Box. All I ever used it fo was playing games online and occasionally watching Netflix. Now I have my PS3 that can do both, and more, for free. What is Xbox offering me for my money that the PS3 doesn't already have? Nothing.

 

I can get free demo's, HD movies, television shows, music, PS1 games, PSP Games, trailers, backgrounds, themes, stable online play, voice chat, video chat, etc. etc. etc for the low low price of nothing. I just no longer see the benefits of paying more money for this service. Some may claim that Microsoft has more stable online play. And they would be right. For every 10 matches you play on PS3, one is going to be laggy and force you to quit.

 

However, I would gladly deal with having to quit and restart a laggy match every hour or so on the PS3, because I am being given these features as a courtesy for purchasing a PS3. With Xbox Live, you are given nothing and are forced to pay.

5211_100857553261324_100000112393199_12455_5449490_n
September 03, 2010

I'd be the last person standing up for a gaming service doing everything but gaming under normal circumstances, trust me, but Xbox Live has evolved dramatically in the years it's been active.  Voicechat, text chat, Demos for every purchasable game on Xbox Live (EVERY game), Movies, TV shows, avatars, reputation, gamerscore.  Microsoft laid out the blueprint for most of what Sony users take for granted; it pioneered a fully-featured online gaming hub.

 

You have no idea what your money goes towards at all.  And I guarantee you, if they were being fair, the price would have gone up much more than 85 cents a month much sooner than 7 years into the service.  They host ALL of this stuff.  Ask any satisfied customer of Xbox Live and they'll tell you, community-wise, you get what you pay for.  The experience is just not the same on PSN; trust me, I play on both sides, and I'd take the overall experience offered by XBL any day of the week, $5/month be damned.

 

You're already stating you don't mind a basally-inferior service with the PS3 simply because it is free.  I don't fault you for that, and I don't judge, but if your argument boils down to "I do it because it's free" and yes, you do get what you pay for, that's not much of an argument at all.

100media_imag0065
September 05, 2010

I just can't agree. I see no noticable difference between Xbox Live and PSN, besides Sony offering more features.. I have been using both for years. You may get a few more laggy matches on PSN, but you are paying nothing. Who would want to pay $60 so they can get a few less laggy matches? It just does not make sense. PSN also has "Home", something Microsoft doesn't. So that more than makes up for the lack of Demo's on every single game (which by the way has always been a thorn in the asses of many developers if you read about it).

 

Also, for the record, I never said that PSN was "inferior", that was your words. I said it offered MORE than Xbox Live, for the price of nothing. And If I have to put up with a few more laggy matches so I can access the ton of content Sony offers me for free, then I consider myself lucky.

5211_100857553261324_100000112393199_12455_5449490_n
September 05, 2010

By inferior I was referring to the laggy matches, something that someone who claims to care little about fluff services should care greatly about: the core gameplay service.  The fact that it's free does not diminish the point that XBL is much more consistent, thus, PSN would be inferior if we spoke only of multiplayer, of your own admission.  Your own ratio was 1/10, correct?  I don't know if that was a flattering or an understatement but regardless, 10% is quite a substantial number when you take into consideration how many matches are fired up every day.

 

And as for "Who would want to pay $60 so they can get a few less laggy matches" question, about 20 million accounts' worth, as long as it's been $50.  Gnash your teeth all you want, I can't see that number dropping nearly as much as you'd like to think.  While PSN may boast twice that amount, keep in mind that while people with multiple PSN accounts still pay zero dollars, people with multiple XBL accounts pay double, triple, whatever for that service.  Who would pay?  Enough to turn a pretty profit.  Sony gets no money off their gamers besides PS+ subs and licencing fees.  That speaks very loudly, unless you're not listening.

 

The last time I checked, PSN Home reminded me of a Second Life ghost town, but if that's your thing, okay.  Other than that, I fail to see how PSN offers "more".  I'm not fighting you on any of this, I'm just commenting on how I see things.

 

I think the soul-crushing part of the whole matter is, if PSN had required a subscription to play as Xbox did, the PS3 probably would have died.  A long time ago.  Offering online service out of necessity is not something that would endear me to the perk, not when the PS3 outpriced the 360 for more than half of its life cycle.  Even now, you can get an Xbox for half the price of a PS3, and assuming you can hard-wire your network connection, it's ready to go.  And as demos are concerned, brushing it off and saying "the developers hate making demos" is pretty weak.  I'm not a developer.  I'm a consumer.  As a consumer, I LOVE that I can try out ANY of the software they have for sale before I make a purchasing decision; that's beyond gratifying, that's a standard setter.  My job isn't to make the developers' jobs easier for them, it's to play games.  If they want my money, they'll make a few concessions.

 

I hear what you're saying, I really do, but it's worded in a way that comes off extremely bitter, and I don't understand why.

Default_picture
September 12, 2010

In all honesty, this is a fair price hike. I don't walk around wishing to pay more money for anything, but a $10 price increase on such a high quality and full featured service is more than worth it. I do agree with the article, more choice on what a subscription pays for should be allowed. Either that or another option could be made available.

 

3 year+ subscribers should be given an option to pay for their service monthly, but at an overall price that's equal to the full year. Basically, if you've been loyal subscriber it would be great to be able to pay month, $5 for a subscription in case you prefer that method or in case your resubscribe period comes around a time when money is a bit tight. You aren't going to jump on the service for one month, then quit leaving Microsoft arsed out with an infrequent userbase. You're hooked, you're loyal. That would be a nice perk. I'm not a long time subscriber, I'm very infrequent and mainly use the free pc version of Live, but I'm planning to get a 360 soon. I miss being on Live, my friend had a nice 360.

Default_picture
October 12, 2010

The best part of this is possibly getting Hulu (sometime) in 2011. Also the worst part. LOL. It'll be just like Netflix. Pay for XBL, pay for Netflix, pay for Hulu. Before you know it, you're paying $100+ per year on top of your broadband internet fees.

So, yes, I agree with Tobias. Tiered plans would be more suited for the consumer. But Micro$oft KNOWS you don't use Facebook and Twitter. They have a way of looking at the numbers. So they'll never offer a tiered plan. That would benefit the consumer and not the shareholders. It's all about sucking every last penny out of you. Look at the new xbox "slim"! You can buy a FOUR gb system for $199... OR you can supersize your order and get an additional TWO HUNDRED and FORTY-SIX  more gigabytes for only $100 more. It's like McDonald's begging you to supersize your meal. OBVIOUSLY they make more from your 52 cent upgrade than it costs them to give you that gallon drink and troth of fries.

$10/year doesn't seem like a lot, but if you multiply $10 per user per year by the 20+ million subscriptions XBL has, they'll be swimming in it. (and that doesn't even account for the millions on top of that that they'll make from the suckers who pay monthly or quarterly).

Look at what we got moving from the original to the 360... MONUMENTAL differences between services offered with no increase. Are you trying to tell me that it took EIGHT years for Micro$oft to finally see a need to hike the price? They do it because they can. Bottom line.

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