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Microsoft Marketing Man Explains Xbox Live Rate Hike

| 2 Nov 2010 16:04
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Xbox Live Senior Marketing Director Craig Davison says that growing infrastructure, the ongoing influx of new content and the sheer size of its user base left Microsoft with no choice but to jack up the rates for Xbox Live.

Microsoft revealed back in August that the price of Xbox Live would be going up a bit, from $49.99 to $59.99 for a year of service. Ten bucks extra over the course of a year is hardly a deal-breaker but the news, as you might expect, nonetheless stirred up some anger among the ranks of the disaffected button-mashers. As Davison pointed out, however, Microsoft has held the line on Live pricing since it rolled out the service in 2002. That's eight freakin' years, people.

"Back in 2002, we launched at 49 bucks, which works out to about $4.17 a month, and we've held steady for that entire time. Now what we've always been very passionate about is that quality needs to be there, but more importantly, the consistency. So if I'm playing Halo: Reach, Gears of War, Call of Duty, the consistency of the service and the experience needs to be there regardless of what that entertainment application is," he told Gamasutra.

"As you can imagine, the costs associated with maintaining a service at that level and making sure all of those features are consistent, we're hitting that quality bar, we're adding the customer service infrastructure necessary, we're accommodating all of the same social features and functionality too, there's a cost," he continued. "Infrastructure costs, of course. And we're continuing to bring more and more content."

"Now in 2002, it was strictly multiplayer gaming. Now we get those Call of Duty map packs before anybody else does. We've got Gears and Halo, of course, as exclusives. We continue to get exclusives on the service as well. And we've gone from 400,000 members in our first year to 25 million," he said. "So during that time, we've definitely got to fund it, and we want to add more and more and more. ESPN is a great example. No extra charge for Xbox Live Gold members. But we want to continue to bring that content in. We also want to continue to innovate on all dimensions, whether it's social, entertainment, or gaming. So there you go."

There you go indeed. It's easy to get angry at a company like Microsoft for jacking up its prices, when it's already got a bazillion dollars stashed in its mattress, but the fact is that this stuff costs money. A lot of money. Given that some conventional content providers count the time between rate hikes in months, I think this is one of those rare moments when it's okay for Microsoft to say, hey, we need more money.

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