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As I’m sure many of you are aware, Microsoft recently announced that it will be upping the price of Xbox Live Gold from $49.99 a year to $59.99 a year. Anytime the price of a service increases like this, the masses are bound to get a little upset. I have to be honest and admit that I am not happy about this change. I would feel better about this if it didn’t seem like such an arbitrary money grab. I understand that a company needs to make money, but I feel as though Microsoft has crossed a line.
The first thing I take issue with is this new price isn’t associated with any major changes to Xbox Live. Although services such as Facebook, Twitter, and arguably most important, Netflix, have been added to the Gold subscription in the last year or so, there was no indication that these additions would eventually lead to a price hike. I feel as though the people being penalized most by this are those who only use Xbox live to play games online. They have no desire to use any of these extra features, but now have to pay $10 more because Microsoft has decided to make these services premium Gold features.
I also find the timing of this price raise to be rather suspicious. Take a look at the upcoming release schedule: September Halo: Reach, October Medal of Honor, November Call of Duty: Black Ops, and in the near future, ESPN3 support. Those are some pretty high profile titles where it is generally accepted that you will need Xbox Live Gold to enjoy them to their fullest. The gamers that play these games are going to be more than willing to shell out the extra $10 to play online (hell, the guys who will pick up Black Ops probably spent $15, $30 combined, on both Modern Warfare 2 map packs).
The other reason they can do this is that too many people are already heavily invested in the Gold subscriptions. I would be at a loss without features such as Netflix and party chat, let alone multiplayer. The sad thing is they are doing this because they know people are going to buy it. I hate to say it, but Microsoft is pulling an Activision.
From an economic perspective this move makes perfect sense. Even with people claiming that they are going to cancel their year long subscription, Microsoft still wins out . Lets do some math. Lets say that there are ten users paying the old $50 price point, Microsoft is making $500. Now not all ten of these people are going to drop the service. If only one person drops the account then Microsoft is still making $540 instead of $500. That means, to lose money as a whole, Microsoft would have to lose more than 10% of it’s year long Xbox live subscription (at least I believe that math is correct, if I am wrong please let me know).
Anyway, I am aware that many people have already vented their frustrations on this topic, but I still wanted to weight in with my two cents. I’m trying to write more and this was a news story that I felt strongly enough about that I stopped what I was doing and immediately wrote about. Hopefully I brought at least one new idea to the table.
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