VIP access to Microsoft’s panoply of online services for the Xbox 360 costs $50 a year. It’s what you pay if you want to play with other gamers online, access game add-ons and demos early, set up party-style chats, provide feedback about other users, and watch Netflix movies. Microsoft calls that “Gold” level membership. The alternative, called “Silver,” comes free with every Xbox 360, and while it lets you keep lists of friends in a virtual Rolodex, you’re held at arm’s length from all the cool stuff, effectively standing at the window looking in.
Most gamers pay the $50 today and don’t seem to miss it. It comes out to $4 a month, half the price of a paperback, or a quarter the cost of a new music CD or DVD movie.
But what if the fee went up? What if it doubled?
Microsoft’s said nothing of the sort, mind you, but Wedbush Morgan analyst Michael Pachter believes it’s just a matter of time. In fact he thinks “Gold” tier Xbox LIVE membership could run as high as $100 in just a year or two.
Speaking on GTTV’s Bonus Round, Pachter reacted to the host’s claim that Microsoft’s Games for Windows LIVE service (the free alternative to the Xbox version) had effectively failed.
“It’s a profit deal,” said Pachter. “Microsoft wants you to never play the game again on your PC and play everything on your 360. That’s why. That’s what it comes down to. You give a PC owner, a PC gamer, an incentive to buy a 360 if you put something that he really wants only on the 360.”
The implication? If you believe Pachter, it’s this: Microsoft makes more money selling Xbox 360 games than PC ones. The evidence seems to favor that view. After all, serious Games for Windows LIVE support has yet to materialize two years on–of the more than 30 Games for Windows branded titles (to say nothing of those without the rubber stamp) released in 2009, only 10 were LIVE-enabled. Compare with 2008 (8) and 2007 (7). If GFW Live is only “live” in the sense that zombies aren’t quite dead.
“You can’t hook a guy into Xbox LIVE Gold if he’s playing on a PC,” continues Pachter. “That’s the other problem. You really want to hook every gamer who has a 360, you want them to buy all their games on 360, play everything multiplayer, pay $50 a year, so that in a couple of years, it’s $100 a year. That’s going up, we all know that.”
I’ve been one of the crankier critics about Microsoft’s Xbox LIVE $50 pay-to-play fee. Not because I have a problem with a company charging extra for special features or functionality, but because disparity bugs me. In this case, disparity with Games for Windows LIVE. Xbox LIVE “Gold” membership costs $50 a year, while GFW Live membership is completely free.
“Well sure,” you might say. “Because Xbox LIVE is a different animal–it offers more.”
True, up to a point. While both services share Gamertags, game achievements, friends lists, and online multiplayer-with-matchmaking, stuff like virtual entourages with voice chat, watching movies with other players, and folding in services like Netflix, Facebook, and Twitter are all unique to the 360’s version of LIVE.
Also unique to the 360: Paying to access that “online multiplayer-with-matchmaking” component.
Forget Netflix and party-mode and group-watching movies for a second and think about online play alone. Multiplayer, from matchmaking tools to game modes to server provisioning, has historically been part of the baseline game experience. id Software didn’t charge extra for IPX/SPX support in the original Doom. Neither did developer Splash Damage when it shipped Enemy Territory: Quake Wars 14 years later.
Playing PC games online costs nothing. That’s expected. Like mouse support, or keyboard shortcuts, or the option to save. These things fall comfortably within the tenets of the adage “goes without saying.”
Until Xbox LIVE, online multiplayer for consoles was also free. For $25, you could buy a modem for your Sega’s Dreamcast that allowed Daytona USA and Sega GT buffs to race over an internet connection. Sony’s PlayStation 2 supported a network adapter that brought online play to series like Call of Duty, Metal of Honor, Ghost Recon, and massively multiplayer games like Final Fantasy XI.
It took Microsoft’s Xbox to introduce the notion that playing head-to-head against your best friend two states (or countries) over was something companies could–or should–charge for.
Xbox LIVE is a money machine for Microsoft. In May 2009, the company claimed it had 20 million Xbox LIVE subscribers. Do the math. If that were 20 million active Gold accounts (they’re not, but a majority are) you’re looking at as much as $1 billion in annual revenue. Bump the subscription fee to $100 and you’re talking upwards of $2 billion. With that on the line, there’s a roughly zero percent chance Microsoft’s going to eliminate the fee entirely, as it did for GFW Live gamers last year.
But then I’m not arguing for free access to Microsoft’s premium service. A plurality thinks a fee is perfectly fine, and from a market standpoint, therefore, it is.
But if that fee starts to creep up (and it probably will eventually–Pachter’s not saying anything prescient or all that provocative here) it’ll draw increasing attention to the disparity between “the way we were” and “the new way Microsoft wants it to be.”
The way I want it to be? Unbundle online multiplayer and matchmaking from the “Gold” tier and make it free for all.
Want to charge for early access to demos and video clips? Netflix and Facebook and Twitter integration? Party voice chat? Whatever comes next? Knock yourself out.
But don’t make Xbox 360 gamers continue to pay for a service Windows gamers enjoy, and have for decades–with arguably superior matchmaking value-additives–at no extra cost.
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