Here is why it's not ok: $50 is already too much for what is essentially P2P gaming. No dedicated servers. Facebook, Twiiter? I get those on my phone and computer free of charge. Same for Last.fm. Kinect? Not interested at all so why do I have to pay extra for this service? ESPN3? Also free on my computer. Hulu and Netflix, I have to pay $60 just so I can have the ability to drop another $20+ dollars on these services? The price hike is terrible.

I respect your opinion but inflation is a fact of life and I image like production costs to maintain the servers. They also constantly improve the service with party chat and improved voice chat ect. Since the beginning Xbox Live has constantly improved and added many things besides the services that you mentioned.

I think you'd be amazed at how much money Microsoft DOESN'T make at the price-hike-enabled $5/month per customer, when you stopped to think about everything MS hosts for the user.  I'm pretty sure most of their revenue is advertisement-based.

I've mentioned this before, but raising prices to account for inflation only makes sense if wages also increase. Instead, wages have stagnated since the '70s.

Iunno about you, Rob, but my hourly wages increased from $5.15 an hour to $7.45 an hour within the past 3 years.  That's roughly 20%, would you agree?  I'm in the poverty bracket, but that's minimum wage.

 

Seems about on-par with the subscription hike, if it weren't for the fact that it's increased 20% over 7 years instead of 3.  I think it's fairly safe to say if you're making more than minimum wage, that argument's pretty null.

Bryan, you've unknowingly proved my point. When I worked retail about 12 years ago, my employer paid me similarly ($5.25 and hour) and over a similar period of time gave me raises (to $7.25 and hour). That was 12 years ago. Wages haven't changed at all.

 

I remember during the debate when Democrats wanted to raise the Federal minimum wage from $5.15 an hour to $7.25 an hour, one of the arguments leveled was the fact that if wages had kept up with inflation over the last few decades, the Federal minimum wage should be $13.

 

Anyone who argues that price increases are justified because of inflation just doesn't have a grasp of the entire economic picture.

Yes, 12 years ago minimum wage was still $5.15; I'm aware of that... I'm not sure what you making above minimum wage has to do with the wage picture in general.  You worked your way up to above minimum wage (congratulations, by the way)...  Five years after you were paid that, minimum wage was STILL $5.15, and now it's $7.25.  Five years after you were paid that, Xbox Live was $4.XX a month, and now it's $5 a month.  Water's wet, the sky is blue.  I see the correlation; why don't you?

 

You're implying that the price hike isn't justified by inflation because if it were Xbox Live should cost... more than minimum wages have increased?  I'm scratching my head here.  I could swear you're saying "If it were inflation, they would have made it $120 a year instead".  

Hudson, you make valid points, regardless of the minimum wage/inflation bickering.  Msoft probably could have done a price increase once the 360 came out (new generation, new interface, better functionality, etc, etc ad nauseum).  So I consider this fortunate.

 

I know I said this in another place, but I'll say it again:

 

$10 price bump in 7 years?  I can deal.  The service just plain WORKS.

 

Plus, I'll always be on the look out for ways to pay less (Costco, Amazon, etc), and so doing I hope the $60 price tag never affects me.  Regardless, I won't have to worry about that until October next year, after snapping up the 39.99 special rate when it showed up on my dashboard.

Bryan, I had decided to let this one go, but rereading your comment just irritates me a little (nothing personal). Wages have not kept up with inflation (see: here, here, and here), and I thought that was evident in the fact that you're being paid the exact same amount I was over a decade ago.

 

You can argue any other reason in defense of the Live's price hike, but what you can't say is that Microsoft is just keeping up with inflation and it's really no big deal. The money you earn today is worth less than it was in the past -- that's the point. Raising the price is a real change in constant dollars.

That makes more sense.  I really didn't get what you were saying; I didn't mean to misconstrue or irritate, Rob.  And that's valid.  I wasn't supporting the inflation argument (or trying to), I was just taking figures and trying to form a picture that made sense to me, which that did at the time.

 

My personal stance has been that the cost to keep these services running has not gotten cheaper over the past 8 years, and that it has probably gotten much more expensive instead.  I don't feel the extra 80-something cents a month represents just how much the price has changed over time, especially considering, as you say, how much weaker the dollar seems today than it was back before.

 

Pulling numbers out of my ass thinking about it, I might suggest that an 80-cent hike today would be equivalent to a much lower cent value eight years ago, such as 40 cents.  How would $55/year chew in your mouth as opposed to $60?  That's obviously way off, but imagine the hike had happened, say, before the recession.

 

Do I think that the 80 cents is all going towards recuperating the increase in cost to the service?  No, I'm not stupid.  But as much income as they make from subscriptions, this still doesn't seem like Microsoft's rubbing their hands together and milking everything they can out of the sub base.

I'm not sure what the costs Microsoft incurs from Xbox Live, and I won't speculate there. I also don't know that those costs have increased or decreased. But I do know that industry analyst Michael Pachter claims that this seemingly minor price hike will bring in big bucks for the company.

 

In the end, though, I'm a consumer. Microsoft's motivations aside, this sucks for me and others like me. And I have no interest in defending this policy -- justified or not.

Inflation and wages are a terrible measure.  The data is skewed by some things that don't necessarily affect us gamers (on average).  They do, sure, but maybe not as much as those over 65.  I'd rather look at actual specific pricing and wage trends rather than a massively convoluted CPI comparison...

 

For example, Increased medical costs factor in GREATLY to the CPI equation.  Sure, decreased wage offerings are a valid point (Rob, to use an excerpt from your 3rd link: "decreasing wages are a product of high unemployment because employers don't have to offer a lucrative salary to attract job candidates.").  But then again, specifically, the minimum wage HAS increased.

 

Then again, some things that most affect most gamers have increased as well.  I'm thinking average rents and gas prices in particular.  So, sure, a price hike of even $10 will probably hurt some people.  If Joe Gamer could pay that increase as 80 cents on a per month basis, maybe it would hurt less, but he/she can't.  Instead, a $60 one-time hit is significant to someone not paying attention to the deals around them.

 

But getting back to the inflation/wage issue: unemployment itself skews the data.  The last 3-6 months has seen increases in hiring, and the wages will follow.  Employers are being cheap, because they can be, but as jobs continue to increase and the supply of able-bodied workers decreases, wages will again increase (over 12 mos?).  Over time, in the long run, wages will catch up to inflation.  Just not quite yet.

 

And I'm still cool with the price hike.