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Analyst: Xbox Live Subcription To Develop More Tiers, Higher Price Options

Analyst: Xbox Live Subcription To Develop More Tiers, Higher Price Options Exclusive

October 19, 2009 | By Leigh Alexander

October 19, 2009 | By Leigh Alexander
More: Console/PC, Exclusive

Could the price of an Xbox Live subscription reach $100? Wedbush Morgan analyst Michael Pachter thinks the next couple of years could see such a price point, visualizing a time when online game service offerings are priced like cable packages.

"Microsoft makes a profit from XBL, and is interested in increasing that profit," the analyst tells us. "They don't want to give anything away for free, and porting of Xbox 360 games to PC that have a multiplayer component exposes them to the potential that some users will quit XBL and buy the PC version to play multiplayer."

Pachter is careful to state he's not aware of any plans on Microsoft's part to increase pricing. "I think that Microsoft will wait until the installed base is quite large -- perhaps 50 million Xbox 360s -- and start to raise price on the existing user base," he suggests.

Microsoft continues to broaden the service offering on Xbox Live with social and multimedia features like Netflix, Twitter, Facebook and cropping up just over the last year. It may make sense, Pachter says, for the company to offer all of these as part of a "premium" Xbox Live service at a slightly higher price point.

"I think of it the same way as cable TV -- a flat rate for "basic" cable and a higher rate for various bundles," the analyst says.

A push toward higher subscription fees for online play, Pachter adds, may be supported by publishers also eager to capitalize. "I think that there is a desire on the part of several publishers to charge for online gameplay," he says.

"EA held out for a couple of years by not putting sports games on XBL, since the company felt it should get the money from subscribers who played its games," he explains. "Activision has made comments lately about monetizing online game play (think Call of Duty), and I could see a premium service that offered discounts for DLC and included some kind of online multiplayer that wasn't available on XBL Gold."

"In any case, the addition of new features on XBL seems to me to be driven by a desire to raise price ultimately. I could be wrong; as many of you know, it won't be the first time."

Microsoft declined to comment on this article, calling it "rumors and speculation."

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