High Programmer > Alan De Smet > Rants > Xbox Live Gold is a rip-off

Xbox Live Gold is a rip-off

Streaming Netflix on my iPadFREE*
Streaming Netflix on my laptopFREE*
Streaming Netflix on my HTPCFREE*
Streaming Netflix on my Android cell phoneFREE*
Streaming Netflix on my PlayStation 3FREE*
Streaming Netflix on my WiiFREE*
Streaming Netflix on my Xbox 360$4 per month*

* Prices assume you're already paying for Netflix seperately. Netflix prices start at $7.99 a month.

Downloading new demos on SteamFREE
Downloading new demos on Xbox 360$4 a month

Saving games to the cloud on SteamFREE
Saving games to the cloud on an Xbox 360$4 a month

Streaming Netflix costs Microsoft damn near zero to provide. There is a little bit of administrative work in the background, but I'm confident that the cost to Microsoft for you watch a movie online is less than $0.001 cents. The real costs are paid by Netflix (and to guess wildly, may be as much as $0.50, but is likely much less). Tellingly, Netflix streaming is free on every other device. Every other console, the major smart phone systems. Even some Blu-ray players and even televisions themselves will stream Netflix for free.

Demos are advertising. Despite the fact that many people are eager to see trailers, movie companies don't restrict the newest trailers to people who buy a premium Film Gold membership. Assuming your movie or game is good, or at least the trailer or demo is good, you want to put it in front of as many people as possible. Steam has figured out how to offer demos for free. It's not surprising since sending you a 2 GB demo costs them less than $0.10 and bandwidth prices keep falling.

Cloud storage is similar. Compared to downloading a demo, uploading and downloading a save file is trivial. You'll be doing it far more often, but it's not really a big deal in the common case. Steam has far less of an economy of scale than Microsoft (and bandwidth is very much subject to the economies of scale), and has to face much larger save files (console games need to keep save games relatively small since there is far less storage space available). Despite that Steam was able to figure out how to provide this service for free.

Now, all of the above are actually free, if you already pay for Xbox Live Gold. Which reveals the real reason they aren't free: Microsoft is trying to convince more people to pay for Gold service. There is some logic to providing online play for a price; Microsoft actually runs the servers and commits to maintaining them. In comparison, with PlayStation or PC games the servers are run by a variety of companies who may take them down at any time. Microsoft must spend time resolving with harassment complaints, and that costs money. But for streaming Netflix, demos, and cloud saving, the value simply isn't there. I'm sure there are people who were considering Xbox Live Gold for online gaming, and these other features swayed them to buy. But I'm betting it's a relatively small number of people swayed by this customer hostile bundling.

Streaming Netflix, demos, and cloud saving are grossly overpriced on Xbox Live Gold. It's a rip-off.

Contact webmaster - Copyright © 2011 Alan De Smet (2011-12-05)