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Consoleation: The (correctly predicted) Xbox Live price increase

Peter Skerritt's picture

Xbox Live Sign-in Image

So, yeah. I called it. Sure, it was just shy of 10 months ago, but I did predict that Microsoft would increase the price of Xbox Live (XBL) subscriptions… and here we are.

The increase occurs on November 1st, which is just before the release of Microsoft's Kinect camera and associated hardware bundles. It's a blatant attempt to cash in on these new users while raising prices for legacy consumers at the same time. At least Microsoft's giving legacy consumers a chance to "lock in" one more year of the service before they're subject to the increase. Speaking in terms of absolute business, it makes sense since Microsoft is expecting (hoping) to attract a ton of new, more casual users with the Kinect launch… so upping the ante means extra profit for Microsoft right away… if the consumers bite.

From a consumer standpoint, especially for legacy consumers, questions are sure to be raised. What else are consumers getting for their money to justify the extra $10? Why raise prices now, especially considering that Sony's competing service is free and the PlayStation 3 has steadily been gaining momentum? Any increase also causes consumers to reconsider their use of a service; how often do users play online, and is it worth the price of a full retail release every year? Each individual's mileage is going to vary, but it's going to be tougher for some to justify paying more every year.

What really gets me is the discussion about the increase that's been going on via Twitter. There are two distinct camps. One side is genuinely frustrated about the increase and openly wonders what the increase is for. The other side uses the same general argument that the "Industry Defense Force" has been using for their "War on Used Games" argument: It's only $10 per year or less than a dollar per month; if you can't afford that, maybe you shouldn't be gaming. What's worse about this is that there are reputable members of the gaming press out there on the Twitter service who are not only siding with this argument—but actually putting it out there. I'm not going to name names or drag anyone into the mud here, but it seems painfully obvious that the industry and its associated press seem to stick together on issues like price increases, used games, and other decisions that adversely affect the consumer.

Let's look at some of these Twitter arguments, shall we?

You guys are nuts if you think a $10 boost is a problem. Put aside entitlement and realize how much you get for that $.

Kinect Sports Screenshot

Again with the entitlement argument. Really? We're so damned entitled that we've been paying the $50 all along, right? Where does this come from? We don't have to be "entitled" to anything, I suppose, if we just stop paying Microsoft for a service that's being provided comparably elsewhere for no fee at all. See, if you want to talk entitlement, you can address PSN users who may complain about that service, which is free—although it does have its share of issues. Legacy consumers have been paying Microsoft, so I move that they have a right to complain and even cancel subscriptions if they think that the price hike is not justified.

People need to stop whining so much; it's just $10.

Indeed. I mean, why would anyone complain about an increase, right? After all, as consumers, we should just lie down and take it. While we're at it, when game prices go up another $10 or more, let's send an additional check for $10 to the publisher. After all, games are worth it! In fact, we don't pay enough. You're right. I will stop whining immediately. After all, it's just $10. Along with the extra $10 we pay for new games now, the $10 Online Pass, $15 DLC map packs, and… oh, wait. I'll stop whining. Really.

Stop bitching about the XBL price increase. Its no big deal. Its not like its $100. $60 is a reasonable price for the service we get.

Yes. $60 is not $100. It's also not $50, either. If you feel that $60 is a more "reasonable" price, then feel free to send Microsoft the extra $10. The "big deal" is that Microsoft is raising prices in the midst of an economy that's on the brink of a double-dip recession. If the industry wants to keep console gaming relevant as a source of entertainment, they aren't going to do well by increasing prices across the board on almost everything from hardware to software to online functionality. They may still keep a decent amount of hardcore gamers, but the general consumer is in the process of being disenchanted—and the fiscal numbers prove it.

You know what? Maybe all of this "bitching" that I'm doing is for nothing. After all, there are still many people who are obviously more than happy to pay more for their video game habit. The industry has become powerful enough where a full-blown crash just won't happen, so even when the more casual consumer base decides that enough is enough when it comes to raising prices on everything—hardware, software, accessories, online functionality, and DLC—there will still be a small but potent base of potential buyers out there who will keep console gaming from complete life support. The unfortunate reality in this mess is that the casual consumer base is what catapulted console gaming from something you did in your parents' basement to a legitimate form of entertainment that rivaled movies in terms of revenue. The industry will never get those people back, and, as a consequence, has taken an immeasurable step backwards.

But it's only $10, right. Keep telling yourselves that.

Category Tags
Platform(s): Xbox 360  
Articles: Editorials   Columns  

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as long as M$ continues to

as long as M$ continues to hold online-multiplay hostage by keeping it attached solely to 'Gold' level memberships, they can and will continue to raise the price.

i have my limit but Live for me as it stands right now is worth $5 a month.

Quote: if you can't afford

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if you can't afford that, maybe you shouldn't be gaming.

I don't see what's your problem with this argument. It's the only argument when it comes to our market system.
and you yourself wrote it:

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...it's going to be tougher for some to justify paying more every year.

your main misinterpretation of the system lies here:

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decisions that adversely affect the consumer

The decisions have been made by the customers, the group you seem to try to defend from the "evil companies". They only can make proposals, nothing more is in their responsibility.
If no one had ever paid Live, APB and this price increase never would have happened. The customers decided to accept this new invention, to pay for MP, which was free in times of Quake, Doom and CS (and actually still is).

You sound a lot like someone points a gun at you when it comes to YOUR decision if you WANT to play some games (or play online). If you want to do that, you have to accept the price tag, or NOT. Your, our decision is the only decision consumers have to really worry about. That's the same with the price in a cheap McD or in a expensive fine restaurant with a Maître d', the same with cheap China trousers or expensive (also China?) trousers from Levis. No ones forcing you to pay more than you can and want.
MS might do better if they offer more variants. Silver->Bronze account and Silver is a sort of limited Gold-account. Not only the achievement, demo, trailer Silver account and the flatrate MP Gold account, something in between is missing.
But we only have the choice between this two options, so choose.

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What else are consumers getting for their money to justify the extra $10?

I think the ESPN deal alone is worth 10... for sports fans.
If Europe also gets an increase it would be another thing.

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in the midst of an economy that's on the brink of a double-dip recession

If you worry about double dip, deflation scenario i suggest investing your money in Gold (or Silver, Palladium, Platinum) not in games. Afaik especially Americans have not much in this really hard currencies.

I won't pay Live now and in the future, i didn't pay Live in the past. Why? Because it is not worth any money for me, not even only this 10$ a year alone. PSN and Steam (and GfW-Live!) offer a free service i occasionally use. I don't play so much online to justify to myself extra money i would have to spent for a Gold account.
And guess what, GfW-Live was once also a service you had to pay for. No one paid, so now it's free. And MS had to reconsider their proposal of trying to charge something.
The consumers decided! Here's just another chance!

The article is overly

The article is overly critical.

The interesting debate is not the morality of Microsoft's pricing decision, but simply whether or not the new price point is too high. It's a free market for goodness sake! Companies should be free to set prices as they see fit, much as consumers are free to purchase accordingly within their budget, much as you are free to voice discontent!

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The "big deal" is that Microsoft is raising prices in the midst of an economy that's on the brink of a double-dip recession.

Invalid argument.

Video games sales decrease during a recession, but the amount of time spent playing games increases as consumers substitute a night out at the restuarant/cinema for a night in in-front of the TV. This requires Microsoft to meet the increasing demand (AT ALL PRICES) for online gaming, justifying the increase in subscription fees.

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If the industry wants to keep console gaming relevant as a source of entertainment, they aren't going to do well by increasing prices across the board on almost everything from hardware to software to online functionality

Sorry, but can you provide any evidence that console hardware prices are actually increasing?? All I see are discounts and sales everywhere.

Quote:

The unfortunate reality in this mess is that the casual consumer base is what catapulted console gaming from something you did in your parents' basement to a legitimate form of entertainment that rivaled movies in terms of revenue. The industry will never get those people back, and, as a consequence, has taken an immeasurable step backwards.

Before you make comments such as this always always remember it takes TWO to tango. You need both consumers AND PRODUCERS to make a market, and where they meet is on the price. Without a profit motive would Microsoft, or Sony, or indeed anyone even have ventured into the games industry in the first instance? New market entrants provide competition to incumbents (Nintendo) which boosts overall innovation and guards against stagnation.

The price increase is not a step backwards, it is a simply free market economics in action. MS raise prices to protect profits.

They know full well they will lose the marginal consumer that won't be able to afford the paltry $1 per month price increase. However those consumers' spending power is implicitly low, such that they wouldn't be making substantial online purchases after subscription in the first place.

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