Microsoft's attempt to increase the price of Xbox Live Gold was widely rejected and so it immediately reversed the decision - instead using it as an "opportunity" to announce free-to-play games would no longer require a membership.
So what's the plan now that Gold's price will be staying the same? While we doubt Microsoft will be attempting something like this again anytime soon, Niko Partners senior analyst Daniel Ahmad says the company will find a "solution" in the long run to essentially get more coin out of each Xbox user.
"The simple fact is that everything Microsoft does or has done recently revolves around trying to get as many people to sign up to Game Pass as they can. The company needs as many core console players as possible on the service while it gears up to acquire new users long term."
"The reversal shows that Xbox is indeed responsive to criticism of how it is achieving its goals, as it does not want to have a repeat of the Xbox One launch debacle, but it should be noted that Xbox will continue to find a solution to increase the revenue per user on console."
Ahmad goes on to mention what's been suspected for some time now - stating how free-to-play had apparently been in the "works for months" and was obviously dropped to offset the backlash of the original announcement.
"The F2P announcement has been in the works for months and that announcement was dropped today to help offset the backlash from the original price increase announcement. Microsoft will continue its focus on Game Pass moving forward, and its acquisition of IP for the service."
Last of all, for any conspiracy theorists out there - Ahmad notes how the decision to reverse the announcement was in no way planned. How do you think Microsoft will go about getting more revenue out of Xbox users now that it's no longer increasing the price off Gold? Share your thoughts down below.
[source twitter.com]
Comments 35
I believe the word for this assessment is "duh".
Microsoft could of easily just increased the price of Game Pass Ultimate to £19.99 a month. I’m sure a lot of people would of moaned but I’d still pay that much for the amount of games that are on GP and the fact that first party games will be added on day one. Looking forward to playing The Medium on GP next 😃
I don't know what Microsoft has in mind, but I'd suggest they look at increasing the appeal of their more expensive and all-inclusive service, Game Pass Ultimate — provided they don't plan on increasing the cost of Game Pass Ultimate very much, if at all. I know that's easier said than done though, but they could releaese some games or content exclusively to Game Pass Ultimate users.
It's pretty baffling who makes these decisions. The increase was bizarre, but it's almost more strange that they ditched the idea so quickly as well.
@MaccaMUFC that would effectively price me out. I mostly continue to buy my games but use Gamepass as a complement. At 19.99, I would just cancel and maybe just use when there is a new game I want to play or wait until there are a few I could play in one month.
@MaccaMUFC Yeah, I think increasing the price of game pass is their next move. They are trying to get as many people on Game Pass for $15, which is a great deal, and then they'll increase the price once their hooked. Just like Netflix, Disney+, etc, etc. Enjoy the $15 while it lasts.
MS probably hates me, all my games are physical (often used) and I don't subscribe to anything. I'm just old-school and I wanted to own all those BC 360 & OG with boxes and manuals. Gamepass and EAplay aren't anything I would ever want or need. Although for newer players, I can see the value and convenience.
Higher game pass prices? More first-party output would be good.
Like Sony said when talking about the gamepass model, it’s not sustainable financially so MS are likely not making profit from it currently, maybe even losing money.
If that’s the case then MS will eventually have to find a way to get more money from users once it has their desired customer base signed up. Will be interesting to see how this is achieved after this price hike.
Dear Microsoft,
Do you want to make more money per head of X-Box gamers?
How about starting by releasing some actual games?
The end.
Since having an Xbox and playing multiple first party games since November one thing I’ve noticed is how atrocious microtransactions are in their first party games. Some games like Forza Horizon 4 actually play adverts to you to try to sell you them. I really dislike it and hopefully MS do not continue down that path.
As for the analyst water is wet. MS is a business all they care about is making more money out of us.
@eggsbox last time they disclosed numbers, Microsoft said there are over 15 million Game Pass subscribers. That means they're taking in $149,850,000 per month, or $1,798,200,000 a year, and that's going on the assumption that all those subscribers are only paying for basic GP and not Ultimate.
A lot of that money will get funnelled back into acquiring games and/or perks for the service, but Microsoft's goal here is to just get users into the Xbox ecosystem. Once they've hooked consumers in with Game Pass, they're more likely to buy DLC and other games on Xbox.
If it weren't financially sustainable, Game Pass would have been killed off a long time ago.
@Fenbops if all they cared about was money they wouldn’t have reversed the price hike on the gold membership
Will the 3 fake mobile billion gamers spend $120 or more for gamepass or stick with their freetoplays, $1 games?
@MajorSkol I don't get people like you. I'll give you an example. A girl tried to cheat on you. Do you still think she won't try to cheat on you? This is not the first time they do this (drm, $60 for online, heavy mtx games). The faster you learn corporations just want your money (just like sony wants $10 more for "next-gen" cross gen games), the better.
@GamerDad66 same. I’d never go the game pass route
What was the last big Xbox exclusive game? I genuinely don’t know.
@sandman89 Gears 5 in September 2019, before that was Forza Horizon 4 in October 2018 and Forza Motorsport 7 in October 2017.
@sandman89 kinda doubt that you never heard of FH4
obviously. they're a business. they're going to try to make money lol. what a nothingburger.
Like I said yesterday a few pound a month on GPU especially now EA have joined would be acceptable.
Its almost as if, although an amazing service, GP isn’t sustainable long term...
"Rage and patchforks Rising prices is bad whine rage whine. I'm leaving Xbox Whine rage whine, I cant aford modern gaming so i rage and whine about it and I dont agree with any who says otherwise"
You brought this on your self those who raged over GWG going up. Get ready for $80 exclusive games, Gamepass Ultimate to 120 per year
Good way to do it would be to finish/fix games before releasing them, that way more people will buy them day one instead of waiting to see any issues and waiting for the patches to fix it, usually by that time the game has drastically dropped in price
@LiterallyDoNotCare obviously all companies are in it for the money but Xbox does care about the consumer at least more so than a lot of other companies. They actually take in feedback and listen to what people have to say. Unlike EA it took them years to finally say that they will fix franchise in madden and they’ve still yet to do it.
@MajorSkol I agree, but anyone is better than ea.
@endlessleep @Grumblevolcano not a lot really is it. Yes obviously heard of fh4 I just thought there would have been more. I guess there was will of the wisps and battletoads but they aren’t what I’d call big games.
@sandman89 Whether Ori counts as big is debatable but it's not really Xbox exclusive anyway as it came to Switch in September.
Yeah that’s true. I’ve actually just got it for switch for my birthday. Hopefully this year there will be some big Xbox exclusives. 🤞
They should have just dumped Xbox Live and made Game Pass the only way to get it.
When it comes to games, I spend most of my money on games.
So the best way to get more money out of me, is to make more games that are interesting and complete experiences. It's pretty simple.
Though with Bethy under the belt, that's a very good start.
Well, we only have one Games Pass subscription in our household but I would buy a family plan in a heart beat (if it's les than 2xGP) but I'm not going to pay for two or three individual GP.
@MaccaMUFC While these points are valid. I think it is important to keep in mind that the value of GP is a "moving target". To me right now after playing through all Halo and Gears games on GP the rest of content feels very much like filler. I am playing Rage 2 , Quantum Break and Tell Me Why but after this I am pretty much done with the current roster (and by extension the previous gen). So I will probably un-subsrcibe until we have something like Halo Infinite in there.
For the next 1 or 1.5 year it is hard to get people into GP after they have played the legacy hits on the service.
*Microsoft creates Game Pass *
Everyone: um, how are you going to make money?
Microsoft: We know what we're doing!!!.....
I expect they'll raise the price of Game Pass. But I also believe that's somewhat self-defeating. It's selling point is that it such a huge value. Once it stops being a huge value, it stops being so attractive. Right now they're using it as bait to sell more actual game licenses. And it's working. Once the price goes up enough it becomes the main course and it discourages people from buying the individual games.
But the move with Gold doesn't work, nor does "increasing revenue from each player." That's an undefined target. Players like us already provide a lot of revenue between subs, new game purchases, sale shopping, etc. They don't really need to raise revenues from us, we already max out. Any attempt to forcibly extract revenues from us just decreases revenues we provide in other areas (less games purchased) and generates bad will. Their focus has to be on encouraging spend from players who don't spend as much as the dedicated core, not just blanket boosting the base monthly fees.
Sony tried to do the same through raising game prices. It works for them because their the mass market leader. But it's already having a detrimental effect on the core with less new games purchased. That won't be a financial negative for them because they have the masses. For MS that relies on the core more, that's a huge offset.
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