What the? Microsoft Announces Xbox Live Price Hike

When it comes to multiplayer gaming on a console, there's Xbox Live and then there's everything else. But starting this November, Microsoft is going to really test the loyalty of its best customers, when it raises the price of the Gold version of that service from $50 a year to $60 a year.

It's the first price increase, ever, Microsoft notes. But Xbox Live is also the only paid online service in the console gaming world. Why does the software giant need to soak its customers when no one else is doing it? And what could possibly justify a price hike? (The price increase "only" affects Xbox Live subscribers in Canada, Mexico, the United Kingdom, and the United States.)

"Since launching Xbox Live in 2002, we have continually added more content and entertainment experiences for our members, while keeping the price the same," Microsoft's Larry Hryb explains in a blog post. "We're confident that when the new pricing takes effect, an Xbox Live Gold membership will continue to offer the best value in the industry."

This justification is somewhat alarming since many of those "entertainment experiences"—Netflix access, Last.FM, Facebook, and Twitter—are simply available for free elsewhere. And while Xbox Live Gold offers other advantages over the Silver subscription, like online multiplayer gaming, those features are available to other console players, and to PC gamers, almost universally, for free. (The few exceptions include certain PC multiplayer games like World of Warcraft that charge monthly fees to access an ongoing virtual world.)

What Microsoft's achieved with the Xbox 360 console and its online service is an enviable customer base of 24 million subscribers—about half Gold, half Silver—that is so loyal to the products they keep paying to be part of it. Over the years, these customers have paid again and again, in fact, not just to stay online with Xbox Live, but in the form of replacement consoles due to the historically bad reliability issues with the Xbox 360. They've also paid in the form of record numbers of game titles sold per consoles—with the highest attach rate in the industry—and a particular fondness for purchasing new versions of old games ever year, including new versions of games like "Madden" and "Call of Duty." (And I count myself among this sad, sad group of individuals.)

So why milk your most loyal customers further? Because you can, of course.

But in markets where Microsoft doesn't control such a faithful audience, things are different. It's nearly identical Games for Windows - LIVE service has never taken off with consumers because they can get free multiplayer elsewhere. And to help position its new Windows Phone platform in the mobile space, Microsoft is allowing gamers to take advantage of Xbox Live functionality on the go—including multiplayer gaming—but is not charging them for the privilege as they do on the Xbox 360. Shh! Don't tell anyone about that little secret. (And if and when Windows Phone users do have to pay for Xbox Live Gold features, you'll know that that device has become truly successful.)

If you are an Xbox 360 gamer, Microsoft has not coincidentally also announced temporary discounted pricing for its Xbox Live Gold subscription, saving you $10 a year off the current price (or as Microsoft advertises it, $20 a year if you use November's pricing). So if you upgrade or extend your subscription now, you'll pay $40 for a year's worth of multiplayer gaming and access to free services, rather than $50 (now) or $60 (November).

"Now would be a good time to renew your subscription," Hryb writes, describing the deal you can't refuse. "Upgrade or renew today and save more than 30 percent off the new price." Indeed. Head on over to the Xbox Live Pricelock website, suck up your pride, and do the right thing. We knew we could count on you, soldier.


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