Microsoft Raises Xbox Live Subscription Fees

Microsoft is raising the cost of all Xbox Live Gold subscription plans for members in the U.S., Canada, the UK, and Mexico, although subscribers can lock in their current price if they renew or upgrade to an Xbox Live Gold subscription before the price change takes effect. That'll be November 1, when the company raises U.S. Gold subscriptions for one month, three month and 12-month packages from $7.99, $19.99 and $49.99 to $9.99, $24.99 and $59.99, respectively. In the UK and Canada, only the 1-month package is getting an increase from 4.99 GBP/8.99 CAD to 5.99 GBP/9.99 CAD. In Mexico, the change is only applied to the full-year package, which increases from 499 to 599 pesos. Microsoft didn't explain why it implemented the change. However, EEDAR analyst Jesse Divnich suggests that eight years of inflation -- not to mention the additional features and services that have been added since the launch of the Xbox Live platform -- mean an eventual, moderate increase in the price comes as "no surprise." "When originally launched in 2002, a Gold subscription cost the same as an AAA video game, $49.99," says Divnich. "When taking into account for inflation ($50 in 2002 is roughly $60 in 2010) and the additional services available to Gold subscribers in 2010, such as ESPN, Facebook, Twitter, Netflix, Last.fm and Video Kinect, a $10 price increase still represents an incredible value to consumers." Compared to PlayStation 3 and Wii owners, Xbox 360 users play online more, suggesting they are "more core-orientated" or derive more value from the platform's online service than its rivals, "despite the fact that Microsoft’s competitors currently charge no subscription fees for online play." With that in mind, Divnich doesn't see a price increase meaningfully impacting the current or future subscriber base, and suggests that promotions from Microsoft offering discounts for renewals will continue to play a role.