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Bloomberg recently reported that former News Corp. president Peter Chernin and Microsoft have discussed the creation of a television channel exclusive to Xbox Live. The channel would offer original shows and reruns aimed at the online service’s young male target audience. There’s been a fair amount of discussion on the benefits and drawbacks of such a move, but I believe the proposed cost offers more food for thought.

To support the establishment of a new channel, Chernin suggested increasing the cost of an XBL subscription by one or two dollars. After hearing about this proposed rate increase, I found myself contemplating the current subscription fee for Xbox Live.

When XBL debuted back in 2002 it was a giant leap forward in the world of multiplayer gaming. It took the basic concept of online console gaming introduced by the Dreamcast and vastly improved upon it. XBL not only gave you the ability to play with other consoles over a broadband connection, it also gave you a consistent profile across all of your games, a unified friends list, and standardized voice chat.

After the failure of the Dreamcast, it was a massive and risky investment by Microsoft, at a time when broadband usage was still low. The service couldn’t have been financially viable without a subscription fee. Fortunately, the investment paid off as XBL grew into one of the major selling points for the Xbox, and many gamers – myself included – were happy to pay for online gaming.

Fast-forward eight years and I find myself still paying the same subscription fee, while wondering why the price hasn’t gone down. Network technology and infrastructure have made massive advances in that time and free online gaming has been available to PC gamers for even longer. More recently, PlayStation gamers have also been given that luxury.

You might argue that XBL has evolved from its original form and requires more investment and maintenance costs; providing features like Netflix, Games on Demand, Messenger integration, and video chat can’t be cheap. There are several problems I have with that assessment:

The first is that the more expensive features like Netflix and Games on Demand are paid services. The cost of downloading movies and games should be reflected in their purchase price, which they are, rather than the subscription fees.

Your average gamer may not even use any of the extra functionality afforded on XBL. Many gamers simply use XBL to play games online and that’s it. I know that I personally don’t use any features on XBL that aren’t also available on PlayStation Network for free.

Gamers outside the U.S. don’t even have access to some of the features like Netflix. If the justification for the subscription fee is the extra functionality, is it fair to charge the same fee to customers who can’t use them?

Microsoft, to their credit, is constantly improving XBL. New features like Facebook and Twitter integration obviously come at a cost, but what comfort is that to someone who doesn’t use them, or prefers to use them on a PC? Additionally, why are we paying for improvements if they plan on raising prices to support features like a TV channel?

No matter how you look at it, XBL is overpriced; or, at the very least, overpriced for those who just want to play games online. This is especially true when you compare it to the free online services offered on PSN. The only problem with that comparison is that XBL offers a better online experience than PSN and many people do in fact use the extra services XBL provides. If it’s unfair to charge the average gamer for features they don’t use, then it’s also unfair to take those features away from those who prefer to pay for a better online experience.

Following that line of thought, I won’t suggest that Microsoft make XBL free, and we all know that’s not going to happen anyway. What I will suggest is that they simply give the silver membership access to XBL Arcade and the ability to play online. That would bring it on par with the rest of the industry, while still giving power users the extra content they desire. They could even introduce a third membership tier that charges you a smaller fee in exchange for select XBL features.

This may just be a pipe dream at this point, because with over ten million gold subscribers and growing, people have shown they’re willing to pay for XBL and Microsoft hasn’t traditionally surrendered any form of additional revenue. That being said, PSN has improved greatly since launch and has significantly closed the gap between the two. The emergence of PSN could force Microsoft’s hand and many Xbox fanboys could find themselves indebted to Sony.

Now that is something I would love to see.

  1. Honestly, they could charge $100 for Xbox Live Gold, and I would pay it. $50 is a steal to be able to play hundreds of games online on the biggest community right now (bigger than PC and PS3), on the network that has the most functionality (demos for every game, services like Netflix before anyone else).

    The way I look at it, is I pick my battles when it comes to multiplayer gaming. I can’t expect, if I play World of Warcraft, that I would be also paying $15 a month for EVE, $50 a year for Live, and $15 a month for FFXI – somehow something would be underutilized. So, in my situation, I would nix Xbox Live Gold and the others in favor of paying the $15 a month for WoW.

    After I quit WoW, I’d hit up Xbox Live.

    • That may be true, but the PSN has been around for longer. I got on the PSN with my PS2 and that account is still the one I use. It also has the PSP and plans for other devices to use it now (phones, tv’s, etc). So that may not be a completely fair comparison.

      I think what Chris was probably getting at is the difference in how active the communities are. Everyone on LIVE has voice chat but the PSN is awkwardly silent. Support for games also seems to fade faster with the PSN whereas people are still playing games from 2007 on LIVE. I couldn’t get an 8 people into a game of Burnout Paradise a few weeks ago no matter how long I was in there or what days/times I tried. I was also the only one with a mic and camera for most of those matches. That wouldn’t have been the case on LIVE.

    • I have Modern Warfare 2 for 360 and PS3.

      Log onto both at the same time and see what has the bigger community (it’s listed right on the top). It’s Xbox Live by a large margin.

      Also, that’s registered users – that’s free registered users. I have 6 accounts on my own.

      Mark pretty much nailed it – if you log into a multi-platform game, more often than not you’re going to find more available matches on Xbox Live, all playing with their included headset.

    • avatar Ferahtsu

      Interesting point Mark, except you neglected to mention that Xbox LIVE existed on the original Xbox, which had (of course) far more registered users than the PS2 PSN. It’s rather unfair on Microsofts part since they had a greater start for their online community.
      Chris: I complete agree that Xbox LIVE is more active and yes it usually does boast more players on a cross platform title than PSN. The trouble is that that’s one isolated title among many. None of this changes the apparent fact that there are more PS3 users than 360, worldwide that is.

      On a lighter note, I prefer the peace and maturity of PS3 online community over the excessive number of 360 users that aren’t even old enough to buy the copy of Halo they’re playing.

  2. I prefer the PS3 not just because of its controller and free PSN access, but because I like the durability of bluray discs, appreciate knowing I can game forever without it melting, and generally like how their store works better (easier to use, navigate, add money to); and since I have a PSP that uses it as well, it’s handy to have that same service for both devices.

    So, for me, paying $50 a year seems overpriced cause I only occasionally use the service. But, I think you have to look at how the function differently… on the PSN, publishers are in charge of servers instead of Sony. Whereas Microsoft is in charge of the LIVE servers. A lot of the differences between the two boil down to that right there (price, functionality, trophy/achievement differences, etc).

    If Sony were to use their own servers, I guarantee there would have to be a price on the PSN service like there is for LIVE. Especially since the PS3 hasn’t been the resounding success that Sony bet it would be.

  3. I recognize I have little to no experience with this sort of thing, but to me paying a flat rate for ANYTHING seems outright idiotic. While it does seem fair, if a little annoying, for Microsoft to charge for the service (as noted they maintain the servers), considering all I really want is the ability to connect with other gamers, paying for a gold subscription is out of the question.

    I’m surprised no one has brought up Steam. It’s nearly as old as Live, and just had a major overhaul yesterday, in fact.

    • I loves me some Steam. I’ve been using the new UI in beta for a while now so I forgot its officially released now. But yeah, its community is bigger than the PSN or LIVE and is also free to join and jump into.

  4. avatar Rs6tony

    I think £40 approx for xbl for 12 months is’nt bad but I do think it should be for the console with say 4 to 6 gamertags to play xbl. Microsoft are pushing their console for the casual gamer/family.

  5. avatar Roberto

    Qu on lui fasse subir le supplice de la plnahce !! \o/Non en fait j en sais rien, j ai pris la version PS3 ^^ des personnes pour aider ce pirate d eau douce ?

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