Xbox Live Price Hike: A Higher Cost for Microsoft

This wasn't entirely unexpected, but Microsoft announced that it's raising the price of Xbox Live Gold, effective November 1.

Yearly subscriptions will increase from $50 to $60, quarterly subscriptions will jump from $20 to $25, and monthly subscriptions will go up from $8 to $10. Before the price hike, Microsoft is giving subscribers a chance to get one more year for $40, effectively negating the new price until 2012. Joystiq points out that several retailers are also selling $40 yearly subscription cards, which you can stock up on now and use over a longer period of time.

The troubling thing about this price hike is not so much the $10 difference itself, but the feeling of powerlessness that it instills.

For people who've been paying $50 for Xbox Live since its inception, the change is a wake-up call. It's a reminder that $50 per year is not a guarantee that comes with the console. Nor is $60, for that matter. Folks who've chosen the Xbox 360 over the Playstation 3 or Wii - both offer free online play - must now realize they are locked in to whatever price Microsoft decrees. At least one analyst thinks that price could reach $100 per year over time.

In essence, Microsoft makes itself look like a cable company by increasing the price of Xbox Live. Sure, you could switch to another provider, or quit the service and sacrifice the benefits, but both those options bring their own hassles and drawbacks, so you suck up the price hike and curse the company that brought it.

Short-term, that's fine for Microsoft. I don't foresee a mass exodus from Xbox Live over $10 per year, and if the Kinect motion controller brings in a new demographic of users, as Microsoft hopes, the Xbox 360 will have a lot of users who never knew about the old price.

Long-term, Microsoft is building a bigger price gap between its online service and those of its competitors, one that'll make consumers think twice about staying loyal to the Xbox brand. If the gap continues to grow between now and the next console generation, Microsoft will get its comeuppance.

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