Industry analyst Michael Pachter has weighed in the Xbox Live subscription increase, and predicts Microsoft will offer a $100 Platinum service in the future.
Pachter – who correctly predicted the $10 price increase last year – said the new price point will allow Microsoft to reinvest these earnings back into the service in order to offer more enhancements down the line.
“The extra $10 translates to around $100 – 150 million per year in additional revenue for Microsoft,” he told Industry Gamers. “I think that they will reinvest at least this much in developing other new applications, and will roll out a premium service with $100 – 200 million worth of enhancements.
“If they can get 2 million users to switch from the $60 plan to the $100 plan, they’ll make an extra $80 million a year, and can keep investing to try to grow that business.”
Pachter believes these enhanced offers could include extras like IPTV or similar functionality down the line, virtual credits, or even iTunes management through Xbox 360.
“The Xbox 360 can work as a media center, and conceivably could do things like managing a music library,” he said. “Although Apple and Microsoft aren’t the best of friends, I could see Apple letting Xbox Live members manage their iTunes accounts through their 360s, and other such premium services.
“I’m not the guy to speculate as to what they will offer (for example, I didn’t even know ESPN 3 existed before it was announced for the 360), but I’m sure that there are many talented and creative people at Microsoft working on such a plan right now.
“For all I know, the Platinum plan might include virtual goods credits for various Microsoft games. If members could get specialized Halo armor or weapons worth the extra $40, they might be more willing to sign up, and it doesn’t really cost Microsoft anything to offer things like that.
“As far as other media center applications, I think we’ll see baby steps on IPTV before we see a full roll-out of a cable-like service. More channels like ESPN 3, perhaps they will offer HBO Go or something similar. There are a lot of emerging services like Hulu, Epix, perhaps a premium YouTube service.
“I think that the possibilities are limitless, although it’s a bit early to speculate on what precisely they will offer.”
The new Xbox Live pricing goes into effect on November 1, but if you are a current Gold member, you can lock in your current price with an additional discount for $39.99.