Microsoft Explains Why Its Xbox Live Price Hike Is Good, And Good For You

As of Monday, an annual Xbox Live Gold subscription costs $60 a year, a 20 percent jump from Sunday, when it was $50. Microsoft is here to assure you that the inflation is in your best interest, and necessary for the company to keep pace with its rising costs to do something or other.

In a Gamasutra interview, a Microsoft marketing director rationalizes the price enhancement:

Back in 2002, we launched at 49 bucks, which works out to about $4.17 a month, and we’ve held steady for that entire time. Now what we’ve always been very passionate about is that quality needs to be there, but more importantly, the consistency. So if I’m playing Halo: Reach, Gears of War, Call of Duty, the consistency of the service and the experience needs to be there regardless of what that entertainment application is.

So that has been critical. As you can imagine, the costs associated with maintaining a service at that level and making sure all of those features are consistent, we’re hitting that quality bar, we’re adding the customer service infrastructure necessary, we’re accommodating all of the same social features and functionality too, there’s a cost. Infrastructure costs, of course. And we’re continuing to bring more and more content.

Now in 2002, it was strictly multiplayer gaming. Now we get those Call of Duty map packs before anybody else does. We’ve got Gears and Halo, of course, as exclusives. We continue to get exclusives on the service as well. And we’ve gone from 400,000 members in our first year to 25 million.

So during that time, we’ve definitely got to fund it, and we want to add more and more and more. ESPN is a great example. No extra charge for Xbox Live Gold members. But we want to continue to bring that content in. We also want to continue to innovate on all dimensions, whether it’s social, entertainment, or gaming. So there you go.

To be fair, the internet, which also offers ESPN 3 and Netflix streaming access, raised its price 20 percent, from $0 to $0. So this all totally makes sense and is in no way price gouging.

Interview: Microsoft’s Davison On How Kinect Will Help Xbox Live Ramp Up [Gamasutra via Joystiq]