Microsoft risks a year of goodwill with its Xbox Live price hike
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Microsoft spent most of 2020 building up goodwill for its Xbox Game Pass service and next-gen consoles, but a new Xbox Live Gold price hike risks wiping all of that out. The Xbox maker announced a number of changes to Xbox Live Gold pricing today — you should read our full post for details — and the bottom line is that it’s moving from $60 a year to $120 for most people. That’s a huge jump and a badly timed one: it’s happening in the middle of a pandemic, just as Microsoft has reported big boosts to its gaming revenue throughout 2020.
The reason for the move is obvious — get people on Xbox Game Pass — but Microsoft has done it in a clumsy and poorly timed way.
Xbox fans are understandably angry. Microsoft stands alone in being the only major platform holder to force players of Fortnite, Call of Duty: Warzone, and other popular free-to-play games to pay a subscription fee for access to multiplayer. That fee has now doubled annually for most Xbox players, as the majority of people buy codes to top up their Xbox Live subscription. Microsoft quietly removed these $59.99 12-month codes last year, and the six-month codes are now priced at $59.99. You can probably still find 12-month codes from resellers and retailers, but they’re officially discontinued.
That means many Fortnite players will now have to pay $120 a year just to play on an Xbox console. Fortnite on PlayStation and Nintendo Switch is free, and even on Microsoft’s own Windows platform, it’s free to play. In fact, PC gamers playing Xbox Live-enabled games don’t even have to pay for Xbox Live Gold to access multiplayer. It’s a bizarre situation for Microsoft to knowingly place itself into.
Microsoft’s announcement doesn’t even attempt to justify this price hike. In a blog post that reads like it was written by a lawyer, Microsoft says “periodically, we assess the value and pricing of our services to reflect changes in regional marketplaces and to continue to invest in the Xbox community,” before announcing the changes. The only justification is:
We invest in our community by strengthening the digital safety of our players, enabling new ways to share, communicate and play with your friends, and delivering industry leading reliability across our network.
What Microsoft’s announcement doesn’t detail is the real reason for these price changes: Xbox Game Pass. Microsoft quickly managed to entice 10 million people onto Xbox Game Pass last year, with $1 deals and more. That figure soon jumped 50 percent to 15 million in September, making Xbox Game Pass look like a very clever bet for Microsoft.
Xbox Game Pass has been praised widely, but Microsoft is now clearly trying to aggressively move its existing Xbox Live Gold player base over to the service. Microsoft is allowing Xbox Live Gold subscribers to switch to Xbox Game Pass Ultimate (usually $14.99 per month) and convert the amount of time in months or years into Ultimate subscriptions. That’s a good initial deal for Xbox Live Gold subscribers, but the end goal is clearly for Microsoft to earn more revenue per Xbox user in the future once they’re hooked to Xbox Game Pass Ultimate and everything it offers.
This move may also allow Microsoft to keep pushing Xbox Game Pass throughout 2021 without having to increase its pricing. Microsoft has so far resisted an Xbox Game Pass price increase, except for the introductory pricing for its PC subscription.
I’ve argued before that Xbox Game Pass is Microsoft’s true next-gen console, and the company’s acquisition of Bethesda for $7.5 billion reinforced that late last year. Microsoft has some big plans for Xbox Game Pass for 2021 and beyond, but it’s clearly keen to move its legacy Xbox Live subscribers over to the service.
Xbox Game Pass Ultimate is a killer deal with access to more than 100 games, xCloud game streaming, and Xbox Live Gold for $14.99 per month. Microsoft has just tackled this migration abruptly and with terrible timing and messaging. Many are still considering whether to buy an Xbox or a PS5, as both consoles are still sold out. The blow of an Xbox Live Gold price increase could have been softened for new and existing Xbox owners with the removal of the need for Xbox Live Gold for free-to-play multiplayer games.
That’s something that Microsoft should consider, particularly as the company has announced Halo Infinite multiplayer will be free to play when it launches later this year. If this Xbox Live Gold requirement still stands, it puts Halo Infinite in the awkward position of being free to play on PC but needing a $10.99 monthly subscription on Xbox.
All of this leaves Microsoft in the odd position of now offering one of the best deals in gaming (Xbox Game Pass) and now one of the worst (Xbox Live Gold). For those not interested in Xbox Game Pass, it’s a bitter pill to swallow.