Microsoft Marketing Man Explains Xbox Live Rate Hike

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Microsoft Marketing Man Explains Xbox Live Rate Hike

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Xbox Live Senior Marketing Director Craig Davison says that growing infrastructure, the ongoing influx of new content and the sheer size of its user base left Microsoft with no choice but to jack up the rates for Xbox Live.

Microsoft revealed back in August that the price of Xbox Live would be going up a bit, from $49.99 to $59.99 for a year of service. Ten bucks extra over the course of a year is hardly a deal-breaker but the news, as you might expect, nonetheless stirred up some anger among the ranks of the disaffected button-mashers. As Davison pointed out, however, Microsoft has held the line on Live pricing since it rolled out the service in 2002. That's eight freakin' years, people.

"Back in 2002, we launched at 49 bucks, which works out to about $4.17 a month, and we've held steady for that entire time. Now what we've always been very passionate about is that quality needs to be there, but more importantly, the consistency. So if I'm playing Halo: Reach, Gears of War, Call of Duty, the consistency of the service and the experience needs to be there regardless of what that entertainment application is," he told Gamasutra.

"As you can imagine, the costs associated with maintaining a service at that level and making sure all of those features are consistent, we're hitting that quality bar, we're adding the customer service infrastructure necessary, we're accommodating all of the same social features and functionality too, there's a cost," he continued. "Infrastructure costs, of course. And we're continuing to bring more and more content."

"Now in 2002, it was strictly multiplayer gaming. Now we get those Call of Duty map packs before anybody else does. We've got Gears and Halo, of course, as exclusives. We continue to get exclusives on the service as well. And we've gone from 400,000 members in our first year to 25 million," he said. "So during that time, we've definitely got to fund it, and we want to add more and more and more. ESPN is a great example. No extra charge for Xbox Live Gold members. But we want to continue to bring that content in. We also want to continue to innovate on all dimensions, whether it's social, entertainment, or gaming. So there you go."

There you go indeed. It's easy to get angry at a company like Microsoft for jacking up its prices, when it's already got a bazillion dollars stashed in its mattress, but the fact is that this stuff costs money. A lot of money. Given that some conventional content providers count the time between rate hikes in months, I think this is one of those rare moments when it's okay for Microsoft to say, hey, we need more money.

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growing infrastructure

Which is what exactly?

ongoing influx of new content

Which most people don't want and would have voted down if given the choice. After all, most of it can be done on PC and other consoles for free.

sheer size of its user base

See this makes no sense, the more customers they have the more each customer must pay. Shouldn't it be the other way around?

Well, if alot of people drop Live then maybe we can get the price back down. That is what they are saying.

I never seem to play online as much, mostly do during the summer period and then I just by a 3 month subscription.

So let us choose what content to want.

Drop Netflix, avatars, music, and all those crappy indie apps.

Theres my $10 differance in price.

I can understand the price hike, especially given it's rather minute size, but I still feel the best thing for gamers would be to have a lower tier option for multiplayer only. The problem is, while this would be best for gamers it would likely lead to a lot of them showing MS just what they really think of the extra stuff that keeps getting lumped into Gold. MS could offer the lower price MP only tier, but it would just as likely lead to them cannibalizing their own sales.

amusing how, previously, they said it was because they wanted to keep the pricing in line with a new, premium game, which they hadn't done since the original xbox.... now this excuse. sounds like a bunch of excuses to me.

I really cannot understand, at all, how people can complain at the cost of xbox live. Have you seen the price of basically ANY other subsription service? Lovefilm? WoW? Even most magazine subscriptions are more than this! Dont even get started on Sky TV... and i wonder how many of them had no price raises over the last 8 years?

And i think as others have already pointed out, if you don't like it, don't use it.

It shouldn't even have a price on it to start with. This holds no weight with me.

A company wants to make money? Really?

And people are upset about this?

They don't need an excuse to raise the price. If you need an excuse to quit, maybe now you have it.

rastlin1985:
I really cannot understand, at all, how people can complain at the cost of xbox live. Have you seen the price of basically ANY other subsription service? Lovefilm? WoW? Even most magazine subscriptions are more than this! Dont even get started on Sky TV... and i wonder how many of them had no price raises over the last 8 years?

And i think as others have already pointed out, if you don't like it, don't use it.

What magazine subscription costs $60 a year?

When you compare Live to PSN, Wii or PC...it's easy to see how people can complain.

Online gaming is a con, especially when all you are doing is shooting people again and again and again. It is so boring. All the avatar clothes are a waste of money and only an idiot would buy then. I download the demos but i can wait a week for them to become silver downloads. End of the day you pay for a service, and if the amount of money seems worth it then buy a new subscription. If not, then do not renew it. There is no issue. People that play mostly online with friends will continue with Live, people that play mostly offline may cancel. You can all bitch about the price, but it depends on how much online gaming is worth for you. Even at $60 a year thats cheap if you are always playing online.

Is he ever going to explain why you need to have Gold in order to see the Netflix account you are already paying for? It's free on the other consoles, why not xbox?

Garak73:

[quote]sheer size of its user base

See this makes no sense, the more customers they have the more each customer must pay. Shouldn't it be the other way around?

In theory, there is a point at which the profits gained from additional users is out weighed by the increase in cost for providing and maintaining the service. Raising the price offsets the cost margin. Although, this school of thought also says that in a free market economy, Microsoft would just stop serving new customers to maintain optimal profit and cost margins.

But I always thought that microeconomics was bull plop anyway.

Is it just me, or does Microsoft just have the shittiest PR ever?

The Admiral:

Garak73:

[quote]sheer size of its user base

See this makes no sense, the more customers they have the more each customer must pay. Shouldn't it be the other way around?

In theory, there is a point at which the profits gained from additional users is out weighed by the increase in cost for providing and maintaining the service. Raising the price offsets the cost margin. Although, this school of thought also says that in a free market economy, Microsoft would just stop serving new customers to maintain optimal profit and cost margins.

But I always thought that microeconomics was bull plop anyway.

Well then it is better if people drop Live, it will help Microsoft and those who stay on Live.

Somehow though, I bet Microsoft doesn't want that,

JaredXE:
Is he ever going to explain why you need to have Gold in order to see the Netflix account you are already paying for? It's free on the other consoles, why not xbox?

Indeed and with PS3 and Wii you have a browser right? So you can go to Facebook, Twitter, etc... for free on those consoles.

And its *still* cheaper than paying for a damn WoW subscription. I have no problem paying

People can defend XBOX all they want, im just going to go play my PC games its only my internet bill and i get free games too what a deal

Oh, so the price increase will only last for one year? I can live with that, no biggie.

Midnight0000:
And its *still* cheaper than paying for a damn WoW subscription. I have no problem paying

That depends on how many games you buy to play on live.

WoW costs $180 a year. Live costs $60. You buy two games to play on Live (say Halo Reach and MoH) and you have spent $120. Add the $60 for Live and you have spent the same amount.

Now, people who play on Live probably buy more than two games a year, right?

The WoW client is another cost but hard to calculate because you could just buy vanilla for less than $20 but there are expansions. Let's just say that buying the WoW client is another $60 360 game. So now, if you buy 3 360 games and pay for Live, you have now paid the same as WoW.

Midnight0000:
And its *still* cheaper than paying for a damn WoW subscription. I have no problem paying

Yes, it can always be worse.
Just don't tell MS that.

I already know a couple of people who let their Gold subscription expire because of this. One was thinking about it anyway and the price hike was the nudge he needed.

I still don't understand why people are complaining. 8 years locked in at the same price, and now they want more...oh well. If you like playing on XBL(the best multiplayer network next to PC) then pay, if you don't....then don't. If that $10 means the difference between gaming and putting food on the table, then buy food. If your parents won't pony up the extra dough then get a job kids, and I'll enjoy XBL without you for a while.

Garak73:

growing infrastructure

Which is what exactly?

ongoing influx of new content

Which most people don't want and would have voted down if given the choice. After all, most of it can be done on PC and other consoles for free.

sheer size of its user base

See this makes no sense, the more customers they have the more each customer must pay. Shouldn't it be the other way around?

Well, if alot of people drop Live then maybe we can get the price back down. That is what they are saying.

Thats how other companies handle it. The water companies actually charge people more when less people are using the service, and as more people use it the lower the price can be moved.

And before one actually tries to defend the price increase, ask yourself just how much of the "services" you use. If I want to use Last.fm, I say screw it and use grooveshark on my laptop. I don't use facebook or twitter. ESPN is the last thing on my list to watch, under even the Lifetime Movie Network. Oh, and Netflix is free to be used on everything else.

Which comes down to me having to pay more for the 1 service I actually use (multiplayer). But hey, the Wii and PS3 got that free too, so no big deal, just means no money wasted on the 360 now.

You know what'd solve all these problems and keep the community happy? Letting the community take a hand in the development of Xbox Live. Honestly I don't think the price change is very bad, but if Microsoft let us run our own servers, choose what features we want or any of the dozens of things that make free online PC gaming doable we'd all be much happier.

You'll pay it if you value your online gaming.

I just wish they would drop the twitter and netflix bollocks, I don't care about social networking, with my job it's safer to opt out. They could also fire those clowns who staff sentyouamessage. That would save me my $10.

The only "added content" I ever liked was 1 vs 100 and they have cut that.

There really should be a tiered system to show them what people really think of their services. How much cheaper would it be if all I wanted was multiplayer, netflix, and the game marketplace? I never watch any of your stupid shows majors minute etc, or use zune marketplace, or buy indy games, or buy arcade games (seriously their pricing can buy me whole titles on steam who knows the meaning of what deal of the week is)

Bottom line, I don't want your bells and whistles I want to play my games, get access to the content for those games and talk to my friends. Save for netflix which Is another rage issue all together in canada ( tiny starter library, no dvd by mail and you save 1$ and get access to 1/3 of the service).

I don't really have anything to say against this Craig Davison chap, his arguments are pretty sound. It makes sense that, with the economic climate fluxing from recession to inflation in the last few years and added XBL content, the price would go up at some point over the last 8 years.

Of course, I don't see why I have to pay for a bunch services I don't use though.

The thing is... if you have a gold account currently, you've had a *ton* of options to renew again for up to another year for way cheap. They've had Gold on sale since the announcement, and if you hadn't taken advantage of it, your loss.

Midnight0000:
The thing is... if you have a gold account currently, you've had a *ton* of options to renew again for up to another year for way cheap. They've had Gold on sale since the announcement, and if you hadn't taken advantage of it, your loss.

I did take advantage of it but that isn't that point. Having a sale doesn't excuse jacking up the price for features that people don't want. Besides, they know that most people won't take the sale. If they thought they would lose money by raising the price and having a sale, they wouldn't have done it.

I have never understood the attitude "I got a deal so I don't care what the regular price is".

What is said is multiplayer is done on the hosts xbox, there is no "live" server. So to people who say "oh multiplayer is so much better on xbox then ps3" maybe the guy your playing with hasa crap connection on psn (i know i do at my dorm)

Most new content is USA specific though I daresay a large number of xbox360 owners are european
then there is the features that go for the U.K and not for U.S.A
And that leaves the rest of us with nothing at all to spare

The Infrastructure? If great quality means getting stuck in 3 out of 10 gears of war matches I wonder where the money goes

All of this shit is just basic stinking bullshit

It's ten more dollars a year, for Christ's sake. Quit crying. If ten dollars a year breaks your wallet, then you have much, much deeper concerns than video games. Like food. And rent.

You say "no one wants these updates!" but you ignore the millions of people who buy a new sports title every year. The want them and they'll gladly pay the extra ten bucks.

The Bandit:
It's ten more dollars a year, for Christ's sake. Quit crying. If ten dollars a year breaks your wallet, then you have much, much deeper concerns than video games. Like food. And rent.

You say "no one wants these updates!" but you ignore the millions of people who buy a new sports title every year. The want them and they'll gladly pay the extra ten bucks.

What if it were $20 more per year? Would you object then? $50 more, $100 more?

It's a matter of principle rather than a matter of money. For example, I got the $84.99 for two years deal, So, I am actually paying LESS than I did last year but that doesn't make it all ok as far as I am concerned.

buy teh haloz:
Is it just me, or does Microsoft just have the shittiest PR ever?

Sony told gamers that they'd be willing to get a second job to afford a PS3 before launch.

Back in the day, paying $50 dollars a year for what was essentially only the ability to play online, I would consider that somewhat of a ripoff.

Now that they at least have some extra features, even if some don't use them very often/at all, I understand if not completely justify the increase in price.

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