Analyst backs XBL price increases

Microsoft’s decision to increase some of its subscription prices for Xbox Live Gold membership is understandable and will not damage the service, EEDAR analyst Jesse Divnich has stated.

The platform holder yesterday announced that monthly XBL Gold membership will increase from 4.99 to 5.99 in the UK, with annual US membership jumping $10 to $59.99.

EEDAR does not believe the $10 price increase will fully affect current Xbox LIVE Gold subscribers until late 2011 and beyond, as Microsoft will likely run numerous promotions allowing users to renew at cheaper rates,” Divnich told investors.

When taking into consideration the numerous services added to Xbox LIVE Gold subscribers over the last eight years, it comes as no surprise that Microsoft would eventually increase the price of a Gold subscription by a moderate amount.

EEDAR believes the fee increase will do little to impact the positive momentum of the Xbox 360.”

Divnich points out that consumers should not forget the numerous additions that Microsoft has made to Xbox Live over the years, and the fact that it remains the most reliable console multiplayer network on the planet.

When originally launched in 2002, a Gold subscription cost the same as an AAA video game, $49.99,” he added.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, and Video Kinect, a $10 price increase still represents an incredible value to consumers.

EEDAR data from our active consumer polls indicate 30 per cent of Xbox 360 consumers have played a video game online 15 times or more in the last 3 months, compared to 23 per cent for the PS3 and 10 per cent for the Wii.

The data reinforces previous notions that the Xbox 360 consumer base is more core orientated and/or that consumers find great value in the Xbox Live service, despite the fact that Microsoft’s competitors currently charge no subscription fees for online play.”

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