Microsoft Reverses Controversial Subscription Price Hike for Xbox Live Gold

"We messed up..."

Fifteen hours after Microsoft announced a controversial price hike for its Xbox Live Gold gaming subscription, the company reversed its decision following backlash from subscribers. In the initial announcement on Friday, Microsoft said it periodically evaluates its subscription prices and the value of its services so they’re equitable and so the company can continue to invest resources in its gaming services. The company told subscribers the new pricing would be as follows:

  • $10.99 for a one-month subscription, a $1 increase
  • $29.99 for a three-month subscription, a $5 increase
  • $59.99 for a six-month subscription, a $20 increase

According to GeekWire, Microsoft stopped offering annual subscriptions last summer, and the company did not mention annual pricing in its Friday announcement. By raising the six-month subscription fee to $59.99, Microsoft doubled the price of Xbox Live Gold. Microsoft said subscribers who want to upgrade to Xbox Game Pass Ultimate can convert their subscription for no additional charge. Xbox Game Pass Ultimate costs $14.99 a month, after the first three months which cost $1 each.

The price increase does not affect all regions, however. Microsoft said they would notify affected subscribers, including U.S. subscribers, by email. The subscription price increase would not be implemented for at least 45 days from the date of the emails.

Subscribers shared their frustration on social media. One Twitter user, @swooper_d, said the Xbox Live Gold price hike was “unscrupulous, unjustified and will hit families most.” Others said they're considering switching to other gaming consoles, like PlayStation. Other reactions on Twitter included these:

Twitter users shared their frustration about the subscription price increase Friday.

Microsoft backs down on increased subscription prices

Just before 9 p.m. Friday (Pacific time), Microsoft backed down, reversing its decision.

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“We messed up today and you were right to let us know. Connecting and playing with friends is a vital part of gaming and we failed to meet the expectations of players who count on it every day. As a result, we have decided not to change Xbox Live Gold pricing,” Microsoft’s Xbox Live Gold Team said.

“We’re turning this moment into an opportunity to bring Xbox Live more in line with how we see the player at the center of their experience. For free-to-play games, you will no longer need an Xbox Live Gold membership to play those games on Xbox. We are working hard to deliver this change as soon as possible in the coming months,” the team added.

Phil Spencer, head of Xbox, apologized to subscribers on Twitter in a reply to Parris, @vicious696.

Phil Spencer, head of Xbox at Microsoft, apologized to a user for the "angst and emotion" caused by the subscription price hike for Xbox Gold Live.

Subscription prices for current and new subscribers

Microsoft is keeping its previous pricing for Xbox Live Gold subscriptions in place and bringing back a 12-month retail subscription option.

  • $9.99 for a one-month subscription
  • $24.99 for a three-month subscription
  • $34.99 for a six-month subscription
  • $59.99 for a 12-month retail subscription

Other gaming subscription services

Xbox has some competition with other gaming subscription services, some console-based and others cloud-based, including these:

  • A PlayStation Plus subscription is available for $9.99 for one month, $24.99 for three months, or $59.99 for 12 months. PlayStation requires a console.
  • Nintendo Switch Online has individual memberships ($3.99 for one month, $7.99 for three months and $19.99 for 12 months) and a family members ($34.99 for 12 months). Nintendo Switch requires a console. This service launched in September 2018 and has not increased prices since launch.
  • Amazon Luna, a cloud-based gaming service, is still in beta. It is available for $5.99 a month.
  • Apple Arcade, a cloud-based gaming service, is $4.99 a month.
  • Google Stadia Pro, a cloud-based gaming service, is $9.99 a month.

There are many games and features that differentiate gaming subscriptions from each other, so pricing is not the only factor a gamer uses to decide which service(s) to buy.

Image courtesy of Microsoft

Insider Take

Microsoft did not anticipate the fury its increased subscription prices would incite from gamers who didn’t hesitate to share their displeasure on social media. We have to question Microsoft’s timing and deployment of the news. First, Microsoft shared the news quietly on a Friday two days after the much-anticipated presidential inauguration. Did the company hope the announcement would get lost in the weekend news cycle or that no one would notice?

Also, during a pandemic with no immediate end in sight, it seems odd that Microsoft would choose now to increase the subscription price of Xbox Gold Live. This makes their gaming subscription twice as expensive as PlayStation Plus. The severity of the price increase is questionable too. Netflix was in a similar situation when it increased its prices recently, but they didn’t double them. They graduated the price increase, and consumers can easily switch streaming services. The situation is different for someone who owns an Xbox gaming console. They are stuck, unless they are willing to switch to another console. To Microsoft’s credit, they acted swiftly to reverse their unpopular decision.

There are lessons here for Microsoft and other subscription companies: test price increases with your subscribers and target prospects. Ask yourself if there are their blind spots you’re missing. Why is now the right time to act? Then monitor your subscribers’ reactions on social media and through your customer service channels. Perhaps most importantly, when you’ve made a mistake, own up to it and make it right as soon as possible.