The Xbox Live subscription

Gamasutra relays a report by Seattle Post that shows Microsoft numbers for Xbox Live Gold subscribers. The more recent figures are from February 2008, showing that 56% of all Live members were Gold (60% in the US). The percentage was actually down 4 points yoy.

At that time there were 10M announced Live members , so that was about 5.5M Gold subscribers – if the proportion was still the same today (it might have increased since thanks to the NXE, which has brought them 3M members since November 08) that would be 9.5M Gold subscribers (there are 17M Xbox Live members). According to the latest numbers on VGChartz there are 28.5 millions of Xbox 360 distributed worldwide -the total Live members accounts are about 60% of that.

Requiring a subscription for allowing users to play online together isn’t a good business practice from our point of view , because it auto-limits all the value that Microsoft and game providers can withdraw out of it : network effect, viral propagation, longer life cycle for products,  more active community, opportunities for selling more DLC and generally include more recurring revenue, etc . Besides, it segregates the audience and restricts the online multiplayer play to the most motivated, affluent and hardcore users only, which is likely to becoming a problem now that they’re trying to grow towards different audiences.

Actually, having more than 50% of the connected user base paying the subscription is already a high result in these conditions – and a shame at the same time when realising that the total number of accounts with capability of online play is just 33-36%  (56-60% of 60%) of the total console shipments. Maybe the numbers have improved since, but that’s still restricting their online opportunities a lot, which is ironic as Microsoft has chosen online as a USP and invested a lot in the service. It doesn’t help that the model is so closed for third party operators either – Microsoft controlling pretty much everything and the rules being centered around the paying online content only (you can’t publish a free to play multiplayer game on the Xbox 360, for instance) , there is less appeal for experienced online games providers to migrate there.

By comparison, Sony’s approach seems more open towards players and operators, despite being also very closed in some ways. It’s also very unclear which proportion of the announced 20M PSN accounts are actually used for online play – the numbers mix PSP, PS3 and website accounts.

Both services still seem not ideal to deal with for online operators – for example, there is a need to pay for patch submissions and approval, and each one of these can take several days turnaround. This is very inconvenient for an online service which is likely to patch several times per day, do split testing, and generally evolve very rapidly.