Theory on LIVE charges and free PSN

It's simple business 101: Microsoft charges for Xbox Live because it's a large operation involving hundreds of developers, operations and support staff, and IT resources (datacenters and bandwidth.) and such an operation cannot exist without a clear, defined revenue stream to support it.

With XBL, the revenue streams are advertising, Marketplace royalties and subscriptions. Of those, subscriptions are the most valuable because they are predictable, recurring revenues against which major new projects can be budgeted with decent accuracy. Without the subscription revenue, they'd have to depend on Marketplace royalties and Advertising, which are relatively unpredictable and require large additional marketing dollars to generate, so they'd be less likely to budget large, long-term service improvement projects against them.

In other words, if XBL were free and ad-supported, we wouldn't have things like Inside Xbox, or community events, or things like unified leaderboards or TrueSkill, because those things would be too costly to justify under an unpredictable, ad-supported revenue model. And that is also why PSN doesn't have things like that, and why Home will be a failure.

UnnDunn

Does Microsoft use dedicated servers for hosting games for Xbox gamers? And you are paying a fee? For what?

[QUOTE="Subcritical"]

[QUOTE="PBSnipes"]That would make sense, except for the part where MS turned something like a $14 billion profit last year.st1ka

And how much of that was from the Xbox division? None.

actually they had a 700 million profit in Q3 and Q4 2007

Really? Despite operating loses from poor hardware quality and having to extend the warranty? Despite stagnant sales? Where did this profit come from?

[QUOTE="st1ka"][QUOTE="Subcritical"]

[QUOTE="PBSnipes"]That would make sense, except for the part where MS turned something like a $14 billion profit last year.Subcritical

And how much of that was from the Xbox division? None.

actually they had a 700 million profit in Q3 and Q4 2007

Really? Despite operating loses from poor hardware quality and having to extend the warranty? Despite stagnant sales? Where did this profit come from?

the extended warranty was a provision created last year, it has no effect on this years books

and Q1 this year the xbox had about 70 million profit

the profits come from game and acessorie sales

[QUOTE="Subcritical"][QUOTE="st1ka"][QUOTE="Subcritical"]

[QUOTE="PBSnipes"]That would make sense, except for the part where MS turned something like a $14 billion profit last year.st1ka

And how much of that was from the Xbox division? None.

actually they had a 700 million profit in Q3 and Q4 2007

Really? Despite operating loses from poor hardware quality and having to extend the warranty? Despite stagnant sales? Where did this profit come from?

the extended warranty was a provision created last year, it has no effect on this years books

and Q1 this year the xbox had about 70 million profit

the profits come from game and acessorie sales

Yes, they created the extended warranty last year. But that doesn't mean there is no cost associated with it this year. Everytime someone's Xbox dies (which happens frequently compared to electronic industry standards), they have to pay money for shipping (costs that have doubled because of high shipping fees and energy costs), as well as staffing service employee's, etc.

They are still losing money. And their market share is stagnant. Has been for quite some time.

[QUOTE="st1ka"][QUOTE="Subcritical"][QUOTE="st1ka"][QUOTE="Subcritical"]

And how much of that was from the Xbox division? None.

Subcritical

actually they had a 700 million profit in Q3 and Q4 2007

Really? Despite operating loses from poor hardware quality and having to extend the warranty? Despite stagnant sales? Where did this profit come from?

the extended warranty was a provision created last year, it has no effect on this years books

and Q1 this year the xbox had about 70 million profit

the profits come from game and acessorie sales

Yes, they created the extended warranty last year. But that doesn't mean there is no cost associated with it this year. Everytime someone's Xbox dies (which happens frequently compared to electronic industry standards), they have to pay money for shipping (costs that have doubled because of high shipping fees and energy costs), as well as staffing service employee's, etc.

They are still losing money. And their market share is stagnant. Has been for quite some time.

i assume all those extra costs are part of the provision set last year, remember that provision is meant tolast the entire 360s lifetime as long as it lasts microsoft has no aditional costs, as for their market share and money they are loosing right now they are no diferent then sony

and by the way all those extra costs you just said apply to all companies

But what about the meat-and-potatoes of the online experience: online gaming? In most scenarios, you make the core service free and charge for the extras. But with Live, it's the other way around. Why not reverse the model and charge the $50 for all the TrueSkill, video-chatting, cross-game invites, and so on...maybe even dedicated gaming servers (IOW, true premium "value-added" onine play) and offer basic no-frills online gaming free to all the Silver users?HuusAsking

Well said. That's always been my biggest gripe about Live, just to play online it costs $50. I dont care about "trueskill matchmaking" or whatever, I had Live for a year and still dont even know what that is. Just gimmie the online gameplay, and keep the "features" that I hardly even use.

[QUOTE="UnnDunn"]

It's simple business 101: Microsoft charges for Xbox Live because it's a large operation involving hundreds of developers, operations and support staff, and IT resources (datacenters and bandwidth.) and such an operation cannot exist without a clear, defined revenue stream to support it.

With XBL, the revenue streams are advertising, Marketplace royalties and subscriptions. Of those, subscriptions are the most valuable because they are predictable, recurring revenues against which major new projects can be budgeted with decent accuracy. Without the subscription revenue, they'd have to depend on Marketplace royalties and Advertising, which are relatively unpredictable and require large additional marketing dollars to generate, so they'd be less likely to budget large, long-term service improvement projects against them.

In other words, if XBL were free and ad-supported, we wouldn't have things like Inside Xbox, or community events, or things like unified leaderboards or TrueSkill, because those things would be too costly to justify under an unpredictable, ad-supported revenue model. And that is also why PSN doesn't have things like that, and why Home will be a failure.

Subcritical

Does Microsoft use dedicated servers for hosting games for Xbox gamers? And you are paying a fee? For what?

I already explained why the Xbox Live fee is justified.

[QUOTE="HuusAsking"]But what about the meat-and-potatoes of the online experience: online gaming? In most scenarios, you make the core service free and charge for the extras. But with Live, it's the other way around. Why not reverse the model and charge the $50 for all the TrueSkill, video-chatting, cross-game invites, and so on...maybe even dedicated gaming servers (IOW, true premium "value-added" onine play) and offer basic no-frills online gaming free to all the Silver users?carljohnson3456

Well said. That's always been my biggest gripe about Live, just to play online it costs $50. I dont care about "trueskill matchmaking" or whatever, I had Live for a year and still dont even know what that is. Just gimmie the online gameplay, and keep the "features" that I hardly even use.

But because Microsoft has already done the work of developing these features (thanks to the Xbox Live subscription fee), developers large and small are able to ship games with full-featured online multiplayer, whereas on other consoles, they can't or won't because it would cost too much or take too much time. Just look at Virtua Fighter 5.

So even if you don't care for all the features Xbox Live offers, paying the subscription fee still benefits you because it means more developers get to ship more online-enabled games with better online features.

Actually, I'd say Microsoft charge for Live because they're money-hungry pigs, but I see your point.Floppy_Jim

Just like every other corporation in the world. :|

[QUOTE="st1ka"][QUOTE="Subcritical"]

[QUOTE="PBSnipes"]That would make sense, except for the part where MS turned something like a $14 billion profit last year.Subcritical

And how much of that was from the Xbox division? None.

actually they had a 700 million profit in Q3 and Q4 2007

Really? Despite operating loses from poor hardware quality and having to extend the warranty? Despite stagnant sales? Where did this profit come from?

[QUOTE="carljohnson3456"]

[QUOTE="HuusAsking"]But what about the meat-and-potatoes of the online experience: online gaming? In most scenarios, you make the core service free and charge for the extras. But with Live, it's the other way around. Why not reverse the model and charge the $50 for all the TrueSkill, video-chatting, cross-game invites, and so on...maybe even dedicated gaming servers (IOW, true premium "value-added" onine play) and offer basic no-frills online gaming free to all the Silver users?UnnDunn

Well said. That's always been my biggest gripe about Live, just to play online it costs $50. I dont care about "trueskill matchmaking" or whatever, I had Live for a year and still dont even know what that is. Just gimmie the online gameplay, and keep the "features" that I hardly even use.

But because Microsoft has already done the work of developing these features (thanks to the Xbox Live subscription fee), developers large and small are able to ship games with full-featured online multiplayer, whereas on other consoles, they can't or won't because it would cost too much or take too much time. Just look at Virtua Fighter 5.

So even if you don't care for all the features Xbox Live offers, paying the subscription fee still benefits you because it means more developers get to ship more online-enabled games with better online features.

Nope MS charges for live because they can. Maybe PSN wont stay free foreve as well.

Sort of got where you were coming from though.

carlisledavid79

He represents his opinion as a theory, you represent yours as fact. Fanboy am confirmed.

because we are willing to pay.

just immagine if theres a world-wide XBL boycott for lets say 5 long months. MS will make it free.

Notice how live is always developing while PSN is stagnant? That's where our money is going.

Actually, I'd say Microsoft charge for Live because they're money-hungry pigs, but I see your point.Floppy_Jim

Yes, and Sony and Nintendo are in it for the fans! We don't care about money, as long as our fanbase is satisfied! How dare you microsoft for wanting to make money.

Notice how live is always developing while PSN is stagnant? That's where our money is going.

TMontana1004

You do realise PSN has a huge update coming in a week's time, right? And the Video Store and Home set for release later this year? The fact that PSN is getting so many big improvements makes paying for Live less and less worth it in my opinion.

Notice how live is always developing while PSN is stagnant? That's where our money is going.

TMontana1004

keep telling yourself that, to make yourself feel good.

like one of the posters said, MS should make online gaming free, and charge for the bells and whistles. if that happens, watch how lots of people would cancel their LIVE subscription.

[QUOTE="TMontana1004"]

Notice how live is always developing while PSN is stagnant? That's where our money is going.

Floppy_Jim

You do realise PSN has a huge update coming in a week's time, right? And the Video Store and Home set for release later this year? The fact that PSN is getting so many big improvements makes paying for Live less and less worth it in my opinion.

But lets think realistically, its take Sony what, 18 months just to finally get in-game XMB. Im not going to complain though, the service is free. You get what you pay for.

[QUOTE="Floppy_Jim"][QUOTE="TMontana1004"]

Notice how live is always developing while PSN is stagnant? That's where our money is going.

GazzaB

You do realise PSN has a huge update coming in a week's time, right? And the Video Store and Home set for release later this year? The fact that PSN is getting so many big improvements makes paying for Live less and less worth it in my opinion.

But lets think realistically, its take Sony what, 18 months just to finally get in-game XMB. Im not going to complain though, the service is free. You get what you pay for.

Can't argue that, in-game XMB is way overdue. But we're getting in-game XMB, an improved Store, the Movie download service and Home all in 1 year, which is pretty great for a free service. Seeing as their main competition is doing all this for free, I think this will really push MS to make some big improvements to Live. So it's a win-win situation for us lucky folks with both consoles. :D

maybe they charge it because the actually work on the system and update it

their not charging just because they can

But it's still charging for the core and leaving the extras for free, which is the wrong way around. Online play is the main reason Live exists in the first place. Let that be free (albeit with no frills) and charge for everything else (the video chat, the TrueSkill matching, the download preference, and so on)--IOW, Value-Added online gaming. It's how Guild Wars works, and they have a setup similar to Live--they don't really host dedicated world servers IIRC, just download servers for the basics and for value-added content you can purchase online. When you think about it, it also makes logical sense. Apart from the basic gatekeeping done to verify users (and that's free anyway--a basic Silver feature), where else would Microsoft servers get involved to get a basic online game started, since most all games are hosted on either clients or non-Microsoft servers?HuusAsking

You probably think that that's a good thing, after all, Microsoft is a greedy corporation that doesn't need to make any more money, right?

But if Microsoft had used this model with Xbox Live from the start, it would be nowhere near what it is today because the money wouldn't be there to make it happen. In fact, it would probably be exactly like what PSN is; a mish-mash of different services with no real cohesion or unity among them. And maybe you'd be satisfied with that. Fortunately, some of us want more from our online gaming service, and are willing to pay for it.

Because then the model doesn't work anymore. Microsoft is using the "free online gaming, charge for extras" model with Games For Windows Live, and the model isn't working because people aren't paying.

You probably think that that's a good thing, after all, Microsoft is a greedy corporation that doesn't need to make any more money, right?

But if Microsoft had used this model with Xbox Live from the start, it would be nowhere near what it is today because the money wouldn't be there to make it happen. In fact, it would probably be exactly like what PSN is; a mish-mash of different services with no real cohesion or unity among them. And maybe you'd be satisfied with that. Fortunately, some of us want more from our online gaming service, and are willing to pay for it.

UnnDunn

But for the closed networks of consoles, that's out--too great a security risk.

So you're saying many console gamers would be willing to forgo matchmaking, messaging, chatting, and many other handy features as long as they were able to hammer out a simple online game with no assistance whatsoever (this is what I meant by "no-frills" online gaming)?

PS. Sony must be willing to continue to pour their own money into it, seeing as how the GameOS has undergone at least one major revision (to 2.0) and numerous minor ones.

So you're saying many console gamers would be willing to forgo matchmaking, messaging, chatting, and many other handy features as long as they were able to hammer out a simple online game with no assistance whatsoever (this is what I meant by "no-frills" online gaming)?

PS. Sony must be willing to continue to pour their own money into it, seeing as how the GameOS has undergone at least one major revision (to 2.0) and numerous minor ones.

HuusAsking

As for Sony, while I obviously don't know the specifics of their PSN operation's size or budget, simple observation would suggest that it is a heck of a lot smaller, less complex and less costly than Xbox Live. When you break it down, all PSN offers (as a platform) is player authentication, a smattering of social features (friends, chat, messaging, presence) and a content-delivery/e-commerce platform. It's not hard to pay for that using royalties from the Store and ad revenue. Dotcoms all over the internet do the same thing and pay for it the same way.

All of the really ambitious stuff they are doing (Home, Qore, premium video downloads, etc.) have direct revenue streams attached; they don't rely on advertising or royalties alone, they charge the consumer directly.

All of the really ambitious stuff they are doing (Home, Qore, premium video downloads, etc.) have direct revenue streams attached; they don't rely on advertising or royalties alone, they charge the consumer directly.

UnnDunn

[QUOTE="UnnDunn"]

All of the really ambitious stuff they are doing (Home, Qore, premium video downloads, etc.) have direct revenue streams attached; they don't rely on advertising or royalties alone, they charge the consumer directly.

HuusAsking

Yes, I am saying exactly that. People are cheapskates, and will not pay as long as they can get away with it. For proof, you need only look at this thread with all the people whining about Xbox LIVE fees. In your proposed model, people would rather create their free external services to replicate some of the premium functionality than pay for it directly.

UnnDunn