Aug 312010

Microsoft recently announced an increase in the cost of XBox Live. The change amounts to somewhere between a 20% and 25% increase, depending on what method you buy your subscription in. Expectedly, reaction has been very unfavorable, despite the statement from Microsoft that the price has held steady since 2002. In droves, people seem to ask, “What do I get for my additional $10?” (as most are assumed to be buying in the most efficient manner, the year’s subscription.)

The response those people actually deserve is, “nothing.” Microsoft’s answer in this respect doesn’t really matter, due to one simple thing that people don’t seem to even consider: inflation. I’ve only been a Live member for three years, so I can’t say what the price was back in 2002, but I’ll take their word for it. There are any number of sites online, such as this one, this one or this one which show that, during the time period from 2002 to 2010, inflation has increased approximately 22%. Microsoft’s adjustment of the Live pricing is completely in-line with normal inflation to keep the price:cost ratio as-is. The addition of any new features or components is gravy. Indeed, one has to assume that with the vastly increased prominence of online gaming since 2002 when the Dreamcast was still fresh in peoples’ minds, Microsoft’s expenses for setting up and maintaining a robust online system would be marginally increased even above the break-even point.

Don’t get me wrong, I’m as upset as anyone else about 1 vs. 100 being canceled, but like other things that go away, it was first added to the service with no increase in cost; removing features that have been added for free is not stealing as some would have you think; the removal of items that you weren’t charged extra for when they were added does not mean the price of a service should go down nor should it stop increasing as everything else does. When the cost of bread invariably goes up a quarter, do people ask the baker if that increase in price will come with a commensurate increase in sesame seeds on the loaf? I really hope that answer is no.

What’s more, for the past 7 years, inflation has been creeping up and the service waited this long for a price increase. There would have been justification for a $7.50 price increase in 2007, 5 years after the launch of the service, but Microsoft held for another three years. When you consider the inflationary increases alone, anyone who has been a member since 2002 basically could have paid an extra $51–the cost of an entire year’s service–over that time if things were adjusted.

This sort of reaction isn’t new. Gamers have, without consideration of economics or past history, balked at each generation’s increase in game prices, even when that increase isn’t really an increase at all. The $50 cost for Playstation and Saturn games was called a rip-off by many, only abating somewhat when that price point held into the Dreamcast/PS2/XBox generation. The rallying cry was raised again when the general price for PS3 and 360 games became $60. People forget that back in the days of the Atari 2600, higher profile games fetched $30, new NES games often listed for $35-40 and during the days of the SNES they could range from $50-60 with some (i.e., Chrono Trigger) brushing up against $70. But it’s easy to just decry the industry as soulless money-grubbers because they raise prices — as if they were extorting people into buying lifesaving medicines instead of offering them a luxury hobby. (Mind you, some companies probably are just that, but this isn’t the place for name-calling.)

By the way, those still with an axe to grind about price increases may want to dust off that time machine and go back to yell at the 8- and 16-bit eras. Those prices for the Atari 2600 ($30) from 1981 (the year Space Invaders came out), NES ($40) from 1988 (Super Mario Bros. 3) and SNES ($50) from 1994 (Super Metroid), adjusted for today’s inflation, come out to $71, $73 and $73, respectively, all at least $10 more than the price of current blockbusters like Dragon Age, Call of Duty, Rock Band or God of War, games that have mip-mapping, light-shading , corticular scaling (okay, I made that one up) and often provide dozens of hours of gameplay. Those games from way-back-when were fantastic and worth the money (which is why I own them all and hundreds of others), but they were more expensive, comparatively, than games are now. Keep that in mind when, inevitably, prices for games on the PS4 and XBox 720 (for lack of more original names) come out at $69.99.

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