Nerds! Stop Freaking Out About The Xbox One Subscription Fee

It turns out that some of the features for Microsoft’s upcoming video game console, the Xbox One, will require a subscription fee of $US60 per year.

That’s gotten some gamers and video game journalists riled up, which is ridiculous.

First noticed by Kyle Orland at Ars Technica, the features in question include online multiplayer, access to video services like Netflix, Facebook and Twitter apps, a modified version of Internet Explorer, an NFL app, Skype calling, a TV guide feature called “OneGuide,” and a feature for recording gameplay called “Game DVR.”

Many of those features have been on the Xbox 360 for some time and have required the same paid subscription to Xbox Live. The latter three are new to the Xbox One, however.

Brian Barrett’s post on Gizmodo on the topic perfectly embodies the rage from gamers about the fee. He likens it to the “paywalls” required to access some online news sites:

“You don’t buy a Big Mac and pay extra for special sauce. You don’t buy an iPhone and pay extra for FaceTime. So why in the hell is Microsoft putting some of its most heavily promoted Xbox One features behind an idiotic Xbox Live Gold paywall? Because it can.”

And further into the same post:

“The tyranny of Xbox Live Gold was bad enough when it was limited to making you pay for services you were already paying for. But this is somehow even more insidious. Game DVR, OneGuide, and Skype were all promoted prominently as Xbox One features. It should be a safe assumption that when you buy a product, it will come with the features it’s advertised with.

But it turns out that Game DVR, OneGuide, and Skype aren’t Xbox One features after all. They’re Xbox Live Gold features that you happen to access on your Xbox One. At best it’s a ripoff; at worst it’s disingenuous, an openly cynical marketing switcheroo.”

Microsoft also promoted all of the games that will be exclusive to the Xbox One when it announced the console, but we don’t expect those to be free. Apple may not charge for FaceTime, but it does charge for iTunes Match and extra iCloud storage if you want to take advantage of those features.

This isn’t a “marketing switcheroo.” This is Microsoft charging for access to services that cost them money to offer. Game DVR, for instance, lets gamers record up to five minutes of gameplay at a time in high-definition. Does Brian think that Microsoft gets server power and storage for free?

Also, Microsoft isn’t in the same position as McDonald’s is with the Big Mac and Apple is with the iPhone. It doesn’t get the insanely high margins on the Xbox One which would allow it to subsidise these services. In fact, Microsoft is probably taking a loss on each Xbox One model sold.

That’s because video game console makers (besides Nintendo) generally use the “razors and blades” business model. Just as home printer companies sell the hardware for low prices and make up for it by selling the ink, game consoles are sold for a loss for the first few years and make up for it with licensing fees on games.

If anyone is being disingenuous here, it’s Brian. This isn’t a real issue because anyone who buys the Xbox One and is interested in using features like Game DVR would likely have been fine with paying the same yearly fee for multiplayer alone. Brian says that he has no problem with paying for it:

“Go ahead and charge me for online multiplayer gameplay, Microsoft. That’s a distinctive feature that only you can provide. It’s worth it.”

He’s upset because he’s getting more features for the same price. To top it off, it’s actually a pretty good deal. With previous generations of consoles, if you wanted to record footage of your gameplay, you had to buy extra hardware for your computer. The best of these devices cost well over $US100.

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