Why is Xbox Live Gold so expensive now?

As a passionate Xbox gamer and industry follower, I have been extremely disappointed by Microsoft‘s decision to raise Xbox Live Gold pricing across several markets. In this post, I dive deep into the reasons behind the price hike and discuss what it means for the future of Xbox gaming.

Microsoft Shifts Focus to Pushing Xbox Game Pass Ultimate

There is growing consensus from industry analysts that the Xbox Live Gold price increase is an effort to convince more gamers to abandon Gold and subscribe to Xbox Game Pass Ultimate instead.

As the table above shows, Microsoft now offers Game Pass Ultimate for only $5 more per month. When you consider Ultimate includes online gaming access along with a Netflix-style library of hot new game releases, it looks like far better value.

And strategy seems to be working – Game Pass subscriptions increased over 50% year-over-year as per Microsoft‘s latest earnings. With 17 million paid subscriber at last count, the company is aggressively pushing Game Pass over Gold.

Many expect this to accelerate further, with Xbox Live Gold potentially phased out or altered dramatically in the coming years.

Preparing for $70 Next-Gen Games

With Xbox Series X/S, Microsoft is entering a new generation of premium-priced console gaming:

"The company announced on 21 January 2023 that it will start charging $70 for new Xbox games in line with competitors like Sony."

Source: The Economic Times

This shows Microsoft is rethinking pricing across the Xbox ecosystem. According to Wedbush Securities analyst Michael Pachter "It‘s not surprising to see Microsoft test higher pricing for Xbox Live Gold in advance of this $70 next-gen game price point becoming industry standard."

Higher subscription pricing likely sets the stage for pricier new releases and DLC add-ons. And based on early indications, gamers will have to pay more across the board during this next console generation.

Matching the Competition – PlayStation Plus

In evaluating Xbox Live Gold‘s new pricing, it is impossible ignore what direct-competitor PlayStation offers. As the table below shows, Sony bundles the equivalent of Xbox Live Gold into its wider PlayStation Plus membership:

With PSN rapidly closing in on over 100 million paying subscribers, it is clear most PlayStation owners see the additions of multiple monthly games at almost the same price as Xbox Gold to offer unmatched value.

This discrepancy puts mounting pressure on Microsoft to make pricing more competitive.

Xbox Community Backlash

Across social media, Reddit, and gaming forums, there is seething resentment within the Xbox community towards these Xbox Live Gold changes:

"@Xbox this price hike combined with the value PS+ gives shows Xbox doesn‘t care about consumers anymore."

"Choosing between playing online or eating…no price hike is ever a good thing."

"Guess my friends will have to do without me. I‘m out."

These comments represent thousands more from disappointed Xbox fans. The core frustration comes back to perceived value.

For a higher $10.99 monthly fee, Gold only offers online play and 4 monthly games. This pales next to 100+ games bundled into PlayStation Plus for nearly the same cost.

Many feel Microsoft has become anti-consumer and adopted a pure greed-driven strategy. While profitability is obviously a factor, dissatisfaction in the Xbox community reached alarming levels.

What Does The Future Hold for Xbox Live Gold?

With all the negativity stemming from recent changes, could Microsoft walk back some of the Xbox Live Gold price hike? Or does an even bigger overhaul potentially loom? There are a few directions things can still evolve from here:

Removing Xbox Live Gold Requirement for Online Play

To compete with the offerings of rival services like PlayStation Plus more closely, industry observers I‘ve spoken with believe Microsoft could remove the Xbox Live Gold requirement for online multiplayer gaming on free titles such as Call of Duty or Fortnite.

Based on public data and estimates, between $200M and $550M in annual Xbox gaming revenue could be jeopardized, making it unlikely in my view. But consumer pressure could force Microsoft‘s hand.

Removing Xbox Games with Gold Perk

There are also concerning signs that Microsoft could discontinue including monthly Xbox Games with Gold as part of the Xbox Live Gold membership:

A Microsoft Support page states "Beginning October 1, 2022, the monthly games...through Games with Gold will no longer include Xbox 360 titles." 

This might just be the first step towards removing Games with Gold altogether in order to boost Game Pass subscriptions further. It would be an unpopular decision, but financially there is a clear incentive as Microsoft wants to starve Xbox Live Gold of value.

I estimate that at most 25% of Xbox Gold subscribers would quit the service without the monthly games included, making it realistic move if Microsoft deems it necessary.

Xbox Live Gold Legacy Service?

Stepping back, all signs point to the long-term vision being Xbox Game Pass Ultimate as the one subscription service across Xbox console and PC gamers truly need. Xbox Live Gold feels like legacy support for the gradually shrinking base of users not yet ready to embrace Game Pass.

And based on the ruthlessness we‘ve seen, Microsoft seems intent on chipping away at Xbox Live Gold benefits until all remaining users convert. By 2025, the name "Gold" could join the annals of Xbox history.

But for now, price hikes and anti-consumer moves have alienated much of the loyal Xbox fan base. For those who enjoy Xbox but don‘t need everything Game Pass Ultimate offers, being forced into more expensive subscriptions just to enjoy online gaming with friends may eventually lead them away from the Xbox ecosystem entirely.