Xbox Two: The Unforced Errors (Premium)

It has been an interesting week in the land of Xbox, the company has found itself making two unforced errors that could have easily been avoided. While every company has marketing errors or PR mishaps, Microsoft’s Xbox team has typically found ways to navigate complicated waters with little turbulence.

But that all changed this week with the company accidentally saying that Fall Guys was coming to Xbox, only to have the developer knock that down, and then announcing that they would be doubling the price of Xbox Live Gold from $60 to $120 annually.

In hindsight, it’s easy to say that none of these errors should have happened as both could have been avoided but there is also some underlying truth to these announcements. Fall Guys error aside, it’s very clear that Microsoft wants Xbox Live Gold to go away.

The company posted on Friday morning that they would be updating the price of the online service. Pricing increases in this industry, while not unusual, happen rarely in such a dynamic way that Xbox was trying to justify. But the reality is that part of Satya Nadella’s compensation is tied to Game Pass Subscribers, not Xbox revenue, which means that the objective gets pushed down to the entire Xbox team – Game Pass must grow.

And you might be thinking that the change to Xbox Live pricing was a quick action item to force the migration to Ultimate. But it was much more than that, this was a calculated move that involved the company’s retail partners.

Microsoft went as far as to print entirely new Xbox Live Gold subscription cards, mail them to retails, telling retailers that existing cards would be de-activated for purchase on February 1st, and to start displaying the new cards immediately.

To accomplish this, it takes time - multiple meetings occurred over the price changing, retail and logistical teams were involved, and did no one think that doubling the price of Xbox Live Gold, during the worst pandemic of our generation, would be a bad idea? Especially when you consider that PlayStation Plus is still $60 a year and online gaming, on a PC, remains typically free.

Thankfully, after significant backlash, Microsoft realized that their crazy plot to shift the remaining gold customers to GPU was going to backfire but this was after the initial pricing and model update made it through several layers of approval.

What does this mean? This is not the end. Microsoft wants Xbox Live Gold to go away, that was absolutely clear this week. The bigger question is how will the company start to phase it out? Will they raise the pricing at some point in the future or find another way to end the program, only time will tell.

Microsoft does not want to give up the current Xbox Live Gold subscription revenue, after all, they do need to make money to keep the platform alive. Knowing this, I would not expect a hard and fast shutdown of the SKU, it will likely remain ‘alive’ for some time but all effort is still foc...