Charging for Microsoft Xbox Live

There have been rumours that Microsoft were going to make Xbox live free for all, instead of the current system where a base service is free and the feature packed Gold service is charged for. But why should Microsoft make it free?:

  • It is the best online service of its kind by far. Miles ahead of supposedly rival offerings from Sony and Nintendo.
  • It cost Microsoft a fortune to develop. An investment they need a return on.
  • Continued investment is needed to keep going with the fantastic rate of enhancements coming from Microsoft. The money has to come from somewhere.
  • At £39.99 (UK) per year it is the best value in gaming short of stealing games using torrents.
  • Many millions times that £39.99 add up to a significant income stream for Microsoft, why throw it away?
  • As the industry moves further to a subscription basis this is the future. Why give up on it now?

If anything what Microsoft should do is to further stratify the offering:

  • Platinum, for the true gaming enthusiast with every feature possible at £99.99
  • Gold, as is at £49.99
  • Silver, minimum service with a few key added features £29.99
  • Bronze, minimum service

Then they will make more money from the keenest gamers to spend on the more advanced features that they want. And they would make more money from the people who currently pay nothing but who would pay a bit for some added features. The trick is to always have the motivation there to upgrade.

35 comments ↓

#1 SwiftRanger on 08.11.08 at 2:40 pm

Companies must earn their money somehow but the fact that many of these features are completely free on PC has to mean something, isn’t it? The Games for Windows Live program has recently been made free on all levels by Microsoft because every other service on PC (Steam, Xfire, Impulse, Battle.net, etc.) was doing/going to do a better job at it for no price at all. Does it cost money to maintain? Yes, but not as much as keeping an MMO server alive and definitely not enough for even relatively small companies in the PC games business (declared ‘dead’ by many) to go broke over it.

Again, I don’t have anything against monetising some parts for a certain audience (like for console users who understandably want a single clear-cut solution/service) but charging money for ranked matchmaking, multiplayer achievements and ease-of-use features (the basic stuff) or even demanding extra charges for little game content bits, cheats or wallpapers sounds a bit unethical.

There is a thin line between providing meaningful extra paid options for the gamer who wants more all the time and just squeezing him dry for trivial stuff.

#2 Radie on 08.11.08 at 3:00 pm

I couldnt agree more with you. I am so sick of people whining that they want stuff that costs tons of money for free.

Just because that is what they want, they try to justify that it should be free. I have no problem paying $50 for a year (a few bucks cheaper at times) for the best hassle free service. Especially when it seems to just get better by leaps and bounds.

With that said, I would like to see more free Themes and GamerPics (or clothing for the new avatars). Those are things that shouldnt cost money because it probably takes one man about 8 minutes or so to create a theme. At the very least you shold get a theme/gamepic set of any games that you have purchased. Maybe as a reward for registering the game.

#3 corndog on 08.12.08 at 3:09 am

I like the gold/broze/silver lineup, but I don’t like the platinum addition. Why? Well, gold is the platinum! It has all the possible features now. I like the silver because it can be where you only pay $29 for playing online. But you still don’t get demos, and game video downloads until AFTER the gold customers has had it for 2-3 weeks, plus other options. But $79 would alienate a few people. heck I just bought the pack with the camera, and gold for the price. And making people pay more for the same, and renaming it (or upgrading the name) would be caught by a LOT of people. Like me for instance, gold is already every possible feature. My humble opinion.

#4 Robin on 08.12.08 at 1:46 pm

Microsoft have never published subscriber numbers for Xbox Live Gold. It’s likely that a large number of subscribers are in the US, so paying less than 39.99 UKP per year.

The subscription fee has a negative effect for third party publishers, as it automatically raises the end user cost of online-centric games compared to their PS3 and PC incarnations. It also heavily biases the userbase to players who are already active online gamers. If you’re not making a shooting, racing or American football game you might as well not bother to include online modes, as the subscription presents a barrier to players who only want to occasionally play online with friends, rather than for many hours a month as a hobby.

Finally, it makes it near impossible to implement other business models for online games on the Xbox 360 such as per-game subscriptions, transactions and pay per play, which limits the kinds of games that are viable on the system (there are still no self-sustaining MMOs on the system after over five years), and means there is no ongoing revenue stream for developers, beyond charging for monolithic packs of downloadable content that would be free on other platforms. It is extremely difficult (for many years it was actually impossible) to run dedicated servers for games on Xbox Live, which results in wildly variable connection quality, limited player numbers and host advantage in some games.

The success of games like Call of Duty 4 and GTA4 on the PS3 have shown that the ‘value add’ of Xbox Live’s slicker interface is not important enough to prevent people playing online without it. And of course online gaming on the PC dwarfs the reach of Xbox Live by many hundreds if not thousands of times. Because developers can make money there, without having to fight every inch of the way against what suits the platform holder best.

#5 corndog on 08.13.08 at 12:44 am

Actually Microsoft has published gold subscription numbers. I remember them publishing all the time! They have published when them, when they went from 30% to 40% of console owners, and from 50% to 55% of console owners. They published when it reached the one million mark, the two million mark all the way up to the 10 …I just found the numbers at http://www.wikipedia.com they have it as of may 14th, 2008 as 12 million PAYING GOLD members! http://en.wikipedia.org/wiki/Xbox_live This is 600 million dollars a year. I hope Microsoft goes from too but chances are as soon as Sony thinks their service is worth it to you and i they will charge also.

#6 Final_Rpg on 08.13.08 at 11:49 am

Miles ahead of the psn? The only thing I can see that it is doing ahead of the psn is allowing voice chat across all games and in game invites.

Is that really that great? I mean, hey it’s definitely something that is worth having. But it doesn’t shove the service Microsoft is offering leaps and bounds ahead of the PSN. I’d call it a slight leg up if anything.

It’s your opinion, but jeez I think you’re exaggerating the situation just a touch. Unless you’re talking about the games offered on live. Even then, most of them just seem like flash games I can find on newgrounds.

I’m not trying to insult the XBL service, but don’t make it sound like it’s so much better than anything and everything else out there. It isn’t, honestly.

#7 Alan h on 08.13.08 at 12:03 pm

How do you still have a blog? Paying for a service that should be free isn’t going to win over gamers. PS3 services may not be as good (certainly not “miles” behind) but it is slowly getting there. With in the next few months there is going to be a huge shift in the market towards Sony’s PSN. Such games and services like LBP and Home are going to be vital.

It’s obvious that Sony have invested their equal share into this service but are still refusing to charge. Microsoft have to wake up and see that people don’t want to pay.

#8 Zeph on 08.13.08 at 12:14 pm

Err. Whether the follow a direct cost (subscription) or an indirect cost model (advertising, microtransactions) they still receive revenues which serve maintenance and investment funds. It really doesn’t matter.

Just because Sony, Steam etc follow a free subscription based model do you really think they won’t claw the equivelent of XboxLive £39 subscription fee through some other means, cmon guys wake-up.

#9 BadSeed on 08.13.08 at 12:44 pm

At this point I cannot see sufficient reasons for having to pay for a service that is minimally at the top of the PC and PS3.
The price of the games are identical from one platform to another, the problem arises when you want to play online.
Microsoft, in my view, will possibly have to stop Live gold with payment, because the competition is coming at large steps, maintaining this service free for all.

Frankly what is being circulated here, is worsening what is already expensive and does not improve the offer.
WTH?? Platinum, Gold, Silver and Bronze??? C`mon!!!

#10 T Diz on 08.13.08 at 1:33 pm

This whole article is a bit funny… A consumer saying he would not only rather pay than get it free, but pay more than he already is! So laughable. Don’t you worry about Microsoft’s finances, they pay someone millions to do that already. This is almost insulting to common sense. Don’t write another article or blog another blurb again.

*Cough*Xbot

#11 oldest gamer on 08.13.08 at 1:39 pm

I will NEVER pay for online multiplayer. That is all the Live Gold membership offers to anyone. If they made that one feature free, M$ house of cards would collapse. ! wonder why they don’t publish their tiered subscriptions? How many Live users are Silver, Gold or using the first Xbox? 12 million doesn’t seem to much over 6 years as the recent PSN is 9 million in less than 2 years.

#12 Dwinguel on 08.13.08 at 1:47 pm

Well Microsoft has based his whole business on proprietary software (as opposed to open source) and getting everyone to use that software, keeping it close and incompatible with anything. The idea is to put people in a rat hole they can’t get out of without difficulties (e.g. windows, office but also they expanded this idea to other areas with Internet Explorer, Windows media and wmv).

They made a fortune out of it.

So obviously Microsoft won’t support a model where people can share content and add their bit to an existing software. Basically that would mean supporting an open source model and not having full control (and full revenue) of the product. That just doesn’t fit with Microsoft’s business model.

This might change as MS is facing tougher and tougher competition in general and sticking to their old fashion model doesn’t seem to meet that much success these days. But at the moment, they are still quite far from understanding a different model and even further from adopting it.

The current situation with xbox live makes perfect sense to MS. Why change it?

I’m still wondering if this article is a joke or not. Are you taking the piss Bruce?

#13 ray on 08.13.08 at 3:07 pm

* It is the best online service of its kind by far. Miles ahead of supposedly rival offerings from Sony and Nintendo.

are you for real ? and wht do you base your finding in ?

* It cost Microsoft a fortune to develop. An investment they need a return on.
they already get the return in the saling of their console ..why a consumer who already spend 300 or 400 dollard on a gaming console should on top of that pay a fee to play the game he just bought ?

* Continued investment is needed to keep going with the fantastic rate of enhancements coming from Microsoft. The money has to come from somewhere.
what about all the money they make whit the advertising on xbox live …is microsoft pay you for your blog ?

* At £39.99 (UK) per year it is the best value in gaming short of stealing games using torrents.

no the best value is at sony psn …free….

* Many millions times that £39.99 add up to a significant income stream for Microsoft, why throw it away?

your right microsoft only whant your money…
* As the industry moves further to a subscription basis this is the future. Why give up on it now?

cause only microsoft beleive in this …..

* Platinum, for the true gaming enthusiast with every feature possible at £99.99
* Gold, as is at £49.99
* Silver, minimum service with a few key added features £29.99
* Bronze, minimum service

ok i just got it …you are a share holder of microsoft …why don’t you recycle your self by writting novel or better some ferry tale for kid …i’m sure whit your imagination you could do well…again brucie you just prove how disconnect you hare from the rest of the world.

#14 DragonKnight on 08.13.08 at 3:12 pm

Wow. Xbot fanservice article or what. Actually, more like a Microsoft testimonial. How much were you paid?

#15 Jackson on 08.13.08 at 3:28 pm

I agree with everything except your proposed pricing structure. MS could never get away with that, they are being crusified for charging at all, imagine if they started charging for different tiers, the press would burn them at the stake, and eager to hate fanboys would eat it up, 360 sales would tank.

Because of all the bias in the media and MS hate out there, MS does not always have the freedom to do what may make sence, they have to do what will get the least amount of critisism, and they are critisized for EVERYTHING, often unfairly.

#16 Edgar on 08.13.08 at 3:54 pm

While I agree that XBox Live is by far the best online offering for console players I also think that Sony has been doing a good job catching up with the service. As of right now I have no problems paying for XBox Live, and I gladly cough up the money every February, but I want to see more enhancements coming from Microsoft. XBox Live needs to start adding support for server side hosting, and user generated content. If Microsoft would add those two things they would be even further ahead of Sony and Nintendo with their online offering.

#17 Edgar on 08.13.08 at 4:05 pm

Oh before I get flamed, yes I realize Sony is already ahead of Microsoft when it comes to supporting user generated content with PSN. The problem I have with PSN is it currently lacks a sound cohesive architecture. For starters all games that run over XBox Live use the same ports. This is very beneficial to the gamer, because it allows us to enable port forwarding directly to our XBox which in turn gets around NAT issues and improves performance. The other beef I have with PSN is games tend to lag more on PSN, and yes I realize that lag happens with XBox 360 games as well but not nearly to the extent that they happen on PSN. Of course the lag on PSN is more acceptable because the service is free, which is why I think Microsoft needs to solve this issue on XBox Live by using server side hosting. My point is I have no problem paying for a service, but I need to get the premium experience for my dollars. Up until recently Microsoft could easily make the claim that they offer the premium experience, but Sony has been catching up, and one has to wonder how long it will be before PSN is able to match XBox Live. Most people believe that Microsoft will just offer their service for free when this happens. I’d prefer it if they never let PSN catch up in the first place, and instead offer a service Sony couldn’t hope to match without charging for it.

#18 Rune on 08.13.08 at 4:59 pm

Live is not way ahead of psn. Psn is just as robust if not more so then live. Live is a peer to peer network. It links a bunch of 360 together and that how is their system is set up. Psn uses dedicated servers for internal software. This means more lag.

There is nothing live does that I can’t do on my pc for free. There is a reason why live on windows flopped. 360 users are being shafted by having to pay to play online. They are also being shafted by being nickled and dimed for themes and gamer pics.

Live on 360 should be free.

#19 bednet on 08.13.08 at 5:30 pm

When you’re a hard core gamer it may be worth it, but I only have an evening or two every week to play games, and I don’t play online every time.

For me 50$ a year is way too much considering that I may only put in 100 hours of online play in a year that’s .5$ per hour just to be able to play that damn 60$ game online.

PC is perfect for me, thank you very much.

#20 Mr. G on 08.13.08 at 6:47 pm

To be fair, you can’t expect any company to develop something then just give it away for free. Also, they have to keep it up and running. It’s the same with Windows Live Messenger/MSN, that’s always been free which is a bit of a surprise, why should it be free if it cost whatever amount to develop and again, the cost of running it? And I think £40 a year is cheap for Xbox Live. You’ve got to be realistic, it’s virtually impossible to give something away for free these days. It’s like mobile phone deals, you don’t rerally get a free mobile phone, it’s hidden in with the montly cost, so at some point, you do actually end up paying for the mobile phone. Wake up you guys!

#21 Jackson on 08.13.08 at 6:52 pm

Lets just get a few things clear, first off, PSN and the Wii network are not even in the same legue with XBL, everyone keeps saying PSN is catching up, not true, PSN has just went from complete and total unusable trash and chaos, to a slightly usable but still a joke half @ssed low budget service. XBL is a wonder of networking technology, and American software engineering.

Second, 50 dollars a year is not alot of money by any standards, if you payed over 400bux for a game console you don’t have a right to complain about 50 bux a year.

Third PSN does not have dedicated servers for all games, on PSN Sony left the online play up to the developers, so they have to decide if they want to host dedicated servers or not, Sony simply made it someone elses problem, while they claim credit for themselves.

#22 911 Gaming on 08.13.08 at 7:32 pm

Has anyone forgotten that Microsoft has and still is swimming in bags of money?
Bear with me for a second.
Xbox 360 ripped me off, and I ended up paying $50 more on a 360 than buying the 60GB PS3 at LAUNCH (including tax), Due to accessories. Lets not even forget the cost of sending it in and waiting for it to get back (I’ve already done it four times). Of course I’m satisfied with my Xbox 360, but as soon as I bought Halo 3, and got to the menu, my 360 went all Windows 95 on my ass.
Lets not forget the fact that Microsoft is a company of “Upgrading” and loves to; you guessed it! Pay extra for features that rival consoles already have FREE. Dedicated servers? That’s not a problem on PS3. When there’s a lag on CoD4 PS3, that’s just because the host of the game you are playing has a bad connection. When there’s a lag on CoD4 Xbox 360, it could be that there are way too many people playing CoD4, or maybe way too many people are playing Halo 3, or downloading something of the Marketplace.
Achievements. Oh, so big-a-deal. I want to spend 7 hours earning 2 bucks so I can buy the latest gamertag pic. It was fun at first, until I started having to get them so that I wouldn’t look like a newbie. Then I spent too long playing the campaign through so I wouldn’t get assaulted with “Oh, look at that * noob, he only has * 300 * points, * *! What a * noob.”
And yes, $50 is too much to spend when all I want to do is get online and play and not get cursed at, and whatever. You’ll say, oh, just deal with it. But me? I don’t think I should be paying $50 a year to play on a service where everyone curses at me when I win. And no, I’m not playing 360 anymore. I’m not paying $200 to fix a system that has broke 4 times.

#23 Jackson on 08.13.08 at 8:06 pm

911 gaming, your entire post was whining, sad thing is you were crying about stuff that no one forces you to deal with, you could mute everyone on XBL or you could just skip it altogether, MS does not force you to pay for it, just because you worry about people calling you a noob is not MSes fault, its your insecure @ss fault, you sound lke a hippie, stop crying, 50 bux a year is nothing for what we get on live, i make 50 bux in one hour at work, 50 bux aint breaking nobody.

#24 dff on 08.13.08 at 9:48 pm

Many millions times that £39.99 add up to a significant income stream for Microsoft, why throw it away?

********

ABSOLUTELY NOT TRUE !!!!

#25 LT_Humbles on 08.13.08 at 10:59 pm

Yeah, im not blowing 100 bucks to be a “true gaming enthusiast” I don’t mind the 50 bucks for a yr. I dont want to spend it if i dont have to but that seems ok to me. With that said, if Home is as cool as i think it is going to be than M$ pretty much losses my money. XBL really isnt any greater then PSN. It only seems that way because they have a yr on the ps3 not to mention they had a jump on it with the original xbox. so they appear to have a bit of an edge. Im going to have to agree with the ppl they say your insane, but mostly im going to agree with comment #12 Ray “ok i just got it …you are a share holder of microsoft ” that made me chuckle.

#26 Stone Bytes on 08.14.08 at 1:31 am

I find it counter productive to charge people for services more than it’s already done.
It reminds me of some manager at a video game company who interviewed me for a job.
At some point, he started arguing, rather firmly, that free services and stuff on the net were absurd and would never work, almost scornful.

That was before Youtube, blogs, pictures hosts, MySpaces and Facebooks, file hosting and sharing, music hosting, etc.

It’s highly ridiculous to tax people from get go. You limit your market.
Once stuff is free, you get the traffic, you get potential customers. It’s only then, when they’re in the net, that you can starting maxing them out, but subtlely.

#27 Nak on 08.14.08 at 1:59 am

I think that there are many gamers out there like myself who do not play adversarial MP games on the console simply because we are not good enough (I freely admit it). I hate getting wasted every 20 seconds in a deathmatch etc…. I only play coop games. As there aren’t many coop games around compared to the adversarial modes, I suggest one way that MS can entice those people to upgrade from Silver is to perhaps offer an intermediate mode. I currently find myself kicking my heels most of the time because there are so little coop games available. Have not had a coop game to play since R6 Vegas 2. And I find it is not worthwhile to subscribe to Gold. That is one of the large reasons why people do not move from Silver to Gold. The MP hardcore expert players (bless them) simply make the entire environment no fun for casual players like me. the hardcore gamers should bear in mind to increase the amount of gamers like me so that MS and the game devs make much more money so that they can continue to get the hardcore games they are so used to. Bottom line is profit dudes. You hardcore gamers may be willing to pay for the latest and greatest, but there are a sizeable portion of gamers out there who do not and guess what? I think the casual gamers out there outnumber the hardcore. Also not all casual gamers wanna play kiddie games like what is being offered at Wii and what some execs at MS think. All we want to do is to have fun. But to die every 10 secs in adversarial play is not my idea of fun. Coop, however is damned fun.

For example:
Gold – All the features currently available (same price)
Silver – All the features available on Gold except it is for coop play only (no versus online). Have a charge of say USD25.
Bronze – Similar to what is available on Silver now without any sort of online play. (Free)

Implement that and I will betcha that:

a. More people would be willing to make the leap to online gaming and paid subscription. From $0 to $50 is a huge leap. But from $0 to $25 is not such a huge leap.
b. More developers would be paying so much more attention to coop play rather than just an afterthought or last minute addition, if there is time.

#28 Mark on 08.14.08 at 2:31 am

Microsoft should not for any reason introduce a new “Platinum” class. That would give Microsoft a reason to hold stuff from the gold class, that should be available on the gold class…

I don’t know if that made sense, but I tried to warn you.

#29 Raz on 08.14.08 at 5:03 am

Yes, well. I feel I must point out that while Sony’s service may not be ‘feature packed’; free firmware updates are continuing to add new features that rival XBOX Live’s. Trophies are the answer to Gamerscore, Home is upcoming later in the fall (which XBOX doesn’t have), we now have in-game XMB…and did I mention: it’s completely free? My only problem is support for some of the game servers, but that’s a third-party issue.

Microtransactions are Sony’s bet for turning a profit, and if the money they’re making off my purchases is any indication, it’s working just fine. Home will provide advertising revenue, as well as another avenue for MTs. So how is XBOX Live better, again? ^_^

#30 Darius on 08.14.08 at 10:20 am

Microsoft can make it free. All they need to do is rid hosting the servers themselves. If playstation does everything Xbox does but builds upon it. Whilst keeping it free then it’ll be pretty much screwed. Its also a bit much asking for 100 quid a month to pay for a “Platinum” service i mean The system plus games and Dlc its a little much, For even a hardcore gamer not all of them are made of money. If they maybe didnt throw ridicilous amounts of money getting sony exclusives multi platform then they would be able to keep Xbox free no costs. If this happens next gen coupled with Totally free xbox live for all features and no RROD or above 3% Hardware failure, good list of games and good machine Ill buy an Xbox as well as a playstation next round.

#31 Evilredzombie on 08.14.08 at 10:27 am

PSN is no match for live…
I love sony however they need to step up. Id rather pay and get live than have PSN for free…
I agree they could discount it a bit..

#32 DevilsApostle on 08.14.08 at 11:40 am

MS Live was the best, but now it is rapidly losing its touch to PSN. I have both and PSN is not far of from kicking XBLA’s backside.

* PSN is free
* You get HOME for free which is far greater then anything on the 360.
* Constant free upgrades allowing extra features for users
* Better online games (less of them but better. Quality definitely wins over quantity in this case).
* Developers prefer it to XMBLA since it has less restrictions.
* Allows developers to give out freebies and upgrades which XBLA doesn’t due to MS not allowing them to.
* Allowing user generated content to be shared. MS doesn’t allow this.
* If the future is online gaming and Sony offer it for free and by the end of this year it WILL be superior to XBLA then why pay for something less superior?! Doesn’t make sense. Are XBOTS telling me they rather pay £1000 for a ford then have a Lamborghini for free? I don’t think so. XBLA can only charge up to the point where their rivals cant offer anythign better and this is all coming to a end soon.

#33 Robin on 08.19.08 at 1:40 am

#5:

Incorrect. The numbers you cite include Gold (paid and trial) and Silver (free) registrations. Microsoft have never published figures for paying subscribers, and it’s unlikely they ever will (as admitting that more people choose to play online via PSN than Xbox Live Gold would be a huge loss of face). I suggest you read your sources more closely.

#34 Tim on 08.30.08 at 6:18 am

#33:

I fail to see how the percentage of Silver accounts among the 12 million magically translates into those Silver subscribers owning PS3s. It’s entirely possible that of the 12 million Live accounts, maybe half are Gold, maybe even less. But that doesn’t mean that the Silver members “play online on PSN”. That claim is ridiculous. I suggest you think more carefully about this.

#35 Peter on 11.14.08 at 7:07 am

Tim, I’m not sure Robin is claiming XBL Silver Members play on PSN, merely that the actual numbers of XBL Gold Members is less then the users of PSN. I’m not sure that is the case, but I don’t think it matters.

I choose my PS3 over my Xbox any day for its interface and free messaging/game matching. I’m looking forward to getting home installed as it looks great.

Peter

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