Pachter: Xbox Live Gold Will Get More Expensive

[John Funk]

Pachter: Xbox Live Gold Will Get More Expensive

Outspoken industry analyst Michael Pachter thinks that Microsoft will raise the price of an Xbox Live Gold subscription over the next few years.

Speaking in an interview with GameTrailers TV [http://www.gametrailers.com/episode/bonusround/309?ch=3&sd=1_hd], the Wedbush Morgan Securities analyst said that a declining profit margin for Microsoft meant that gamers could end up seeing the cost of an Xbox Live Gold subscription rise to as much as $100 (£61) per year - double its current price.

Microsoft was devoting more and more of its resources to Xbox Live because its comparable service for PCs - Games for Windows Live - simply wasn't profitable, said Pachter. "You can't hook a guy into Xbox Live Gold if he's playing on a PC," said the ubiquitous analyst, ".. 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 you 50 bucks a year so that, in a couple years, it's 100 bucks a year."

"And that's going up, we all know that ... it's a profit deal," he concluded.

Now, to his credit, Pachter has made some accurate guesses in the past, and it is true that Microsoft does love its money (as does every other company in the world). On the other hand, Pachter has also missed the mark with his predictions, and I can't help but think that this is one of those times. While still not quite as robust a service, Sony's competing PSN is slowly encroaching on Xbox Live, and its one advantage is a significant one - it's free. Nintendo's marketplace is free to use as well, which makes Microsoft the only one of the Big Three to charge for its online service.

Thus far, Microsoft has stuck to its guns with Xbox Live, pointing out the better value of XBL compared to its competitors, and has been rewarded with an estimated ~20 million subscribers. However, as that gap narrows, raising the price - let alone doubling it - would seem incredibly foolish, and would be as likely to result in a consumer backlash as it would be to increase profits. So this is an extremely hard pill to swallow, because Microsoft isn't made of idiots - the bad press from a decision like this would be overwhelming.

What I can see happening is for Microsoft to start offering an "Xbox Live Platinum" service which would fetch a higher price, but would have more cross-platform functionality along the lines of the Twitter, Facebook, and Last.FM arrangements that have already been announced. The trick then would be to balance the new Platinum features while still updating Gold in order to keep XBL a step or three ahead of PSN.

But just raising the price on Xbox Live Gold - especially in this economic climate - would be virtual PR suicide for the House That Gates Built. Sorry, Mike, but I don't see this one happening.

(Edge [http://www.computerandvideogames.com/article.php?id=225639])

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[Lord Beautiful]

I'm not necessarily an expert as far as economics goes, but I highly doubt Microsoft would be so bold as to increase the price for Live Gold, especially by 100%.

But your theory of a Live Platinum service does make plenty of sense, but even then I doubt Microsoft would charge any more than, say, 75$ a year, and that's pushing it.

 

[D_987]

Has anything this Pachter predicted ever come true? I understand you might be mis-quoting him, but still I can't ever see this happening...

 

[RobCoxxy]

I think Microsoft would make a fuckton more money if they instead dropped XBLG subscription to a tenner, or made it free a lá PSN.

As XBL already costs the same as a new game, it puts off many players. £100 for 12 months of play would probably kill off any gamers intent on subscribing.

Bad move, drop the price.

 

[Katherine Kerensky]

I certainly hope they don't raise the price.
If people started freaking out about a rumor, I can see people running for the GAME stores and buying all the Gold cards they can... and then the shops could just raise the price, blaming it on 'increased demand'

 

[Escapefromwhatever]

I'm with you John. I know for one that I would cease subscribing if they doubled the price.

 

[Hammith]

You know, as far as I can really tell from Patcher's history (although admittedly I don't follow everything he does), he seems to get things right about 50% of the time. Which is about the same percentage you get if you just guess.

 

[John Funk]

I think Microsoft would make a fuckton more money if they instead dropped XBLG subscription to a tenner, or made it free a lá PSN.

As XBL already costs the same as a new game, it puts off many players. £100 for 12 months of play would probably kill off any gamers intent on subscribing.

Bad move, drop the price.

I don't know that it does. Gold was estimated at ~20 million subscribers last I checked, which is the majority of people who own a 360. So it seems to me that people are fine with paying <$5 a month. If that doubled, though? I'm not sure.

 

[mikecoulter]

I'm so glad I just ordered a PS3.

 

[Remember_the_name]

I think Microsoft would make a fuckton more money if they instead dropped XBLG subscription to a tenner, or made it free a lá PSN.

As XBL already costs the same as a new game, it puts off many players. £100 for 12 months of play would probably kill off any gamers intent on subscribing.

Bad move, drop the price.

eh what about 12-20 million paying for gold, out of 30-35 or so million. Dropping the price won't bring in enough people to make up for lost revenue. If you go from 50 dollars to 25 bucks then everyone needs to join to make up for it. If you go from 50 to 10 then well you better start selling big time.

 

[sunami88]

Yeah, MS is stupid, but nowhere near that stupid.

I call BS, as I often do on Patchers "predictions".

 

[Rednog]

I seriously doubt they would raise it to $100 a year, even then every couple weeks I see some online store or another selling year memberships for around $33. That and they would probably have a hard time actually implementing it considering they would pretty much have to recall all the cards in stores, and if consumers got wind of it I would expect people to just buy a few years worth of cards on the spot and just avoid the price hike.

 

[Apackof12Ninjas]

They wont double the price. If anything I think its gone down already from 60$ USD to a little over 40$ USD for a 12month card at Wal-Mart. If theres anything this article made me think about its that Sony and Nintendo might start charging for their services. Well Nintendo has no reason to as they make a killing off the wii but Sony will most definitely have to do something. Nothing is free in this world, and charging nothing is absolutely hurting Sony.

 

[Christemo]

another of many reasons not to get a 360 and especially Gold Live. ill stick with my future ps3 and its free internet.

 

[Apackof12Ninjas]

another of many reasons not to get a 360 and especially Gold Live. ill stick with my future ps3 and its free internet.

Wait since when was the whim of a analyst guessing whether or not a service will double their price a reason to not buy a 360???

Thats honestly one of the worst excuse's Ive heard to date.

Might as well have said "I dont like 360's because I like PS3's cause its better"

 

[IckleMissMayhem]

I'm happy paying about £2-3 p/m... if they doubled the price, I'd expect more features.
I've never bought any MS "points" though - don't really see the point.

 

[TimeLord]

I think they should do it, ruin their own followers and push them to PC and PS3. It would be their own fault

Id consider selling my 360 if this happens

 

[More Fun To Compute]

He clarified this on Neogaf.

Yes, I said that XBL would go up to $100 in a couple of years. No, I didn't mean that everyone would have to pay that much.

My point was that Microsoft makes a profit from XBL, and is interested in increasing that profit. They don't want to give anything away for free, and porting of Xbox 360 games to PC that have a multiplayer component exposes them to the potential that some users will quit XBL and buy the PC version to play multiplayer.

As far as I know, Microsoft has no present plans to increase any pricing. However, XBL started up with the original Xbox launch almost 8 years ago, and we have not seen a price increase. I understand that PSN is similar and is free, but PSN is only "competition" for either people who have both an Xbox 360 and a PS3 or for people who haven't bought a console yet. I think that Microsoft will wait until the installed base is quite large (perhaps 50 million Xbox 360s), and start to raise price on the existing user base. They can offer one or two years free to new console purchasers, and still raise the price for the existing user base.

My guess is that we'll see additional tiers, with the current Gold subscription rising modestly to $60 or so, but there is the potential that a Gold membership might lose some features. As Microsoft builds the number of features offered (Netflix, Twitter, Facebook and Last.fm in the past 12 months, who knows what is coming in the next two years), it could offer a "premium" service that bundles all of these for an extra $3/month. I think of it the same way as cable TV--a flat rate for "basic" cable and a higher rate for various bundles.

I think that there is a desire on the part of several publishers to charge for online game play. EA held out for a couple of years by not putting sports games on XBL, since the company felt it should get the money from subscribers who played its games. Activision has made comments lately about monetizing online game play (think COD), and I could see a premium service that offered discounts for DLC and included some kind of online multiplayer that wasn't available on XBL Gold.

In any case, the addition of new features on XBL seems to me to be driven by a desire to raise price ultimately. I could be wrong; as many of you know, it won't be the first time.