Xbox Series X pricing strategy could disrupt the entire gaming industry

Posted: September 11, 2020 in Game Articles, Opinion Piece

by Tom Hoggins via The Telegraph

With the promised Autumn release dates of next-generation consoles Xbox Series X and PlayStation 5 creeping ever closer, it seemed that Microsoft and its great gaming rival Sony were playing chicken over who would reveal the cost of their new box first.

Plenty of speculation filled social media over the months since the pair’s summer showcases, but the firms remained resolutely quiet on the pricing issue, perhaps in the hope that the other would go first and last minute tweaks could be considered.

Pushed by either the leak of its budget next-gen alternative, the Xbox Series S, or the need to be aggressive to have any chance of cutting the significant lead Sony had with the PlayStation 4, Microsoft jumped first.

And it went in with two feet. The more powerful Series X will cost £449.99 while the lower-specced Series S will set players back a faintly remarkable £249.99. Both prices were a highly aggressive move in their own right (many expected both the Series X and PS5 to be tipping over the £500 mark) but the circumstances and strategy surrounding Microsoft’s move are somewhat unprecedented in the gaming industry.

The Xbox Series X is launching without any specific exclusives to speak of, with Microsoft happy to say you can play its first-party games on PC or on the upcoming streaming service xCloud. And while smaller, budget versions of gaming hardware are hardly new, they usually come in the middle of a console’s lifecycle. Releasing one alongside a premium model at launch is new territory.

All of this is in service to Microsoft’s growing subscription service Game Pass. This Netflix-style service offers up a library of games to download for a fixed monthly price. All of Xbox’s own Game Studios titles -such as Halo Infinite- will appear on the service, while the company also announced that FIFA publisher EA would be folding in its own EA Play library into the price. Microsoft have been aggressively pushing Game Pass as the fulcrum of its gaming offering for the best part of two years and it will also be the backbone of xCloud.

Microsoft’s approach to its consoles is not about selling boxes as much as it is ensnaring you into a Game Pass subscription. The Redmond giant is even offering a smartphone style 24 month contract for the Series X and Series S, in which you can pay up to £35 a month (for the Series X) for the new console and access to Game Pass. Taken at face value (not including the inevitable offers on subscription that will come from buying the box up front) over the span of two years that would be cheaper for players than buying the box and a Game Pass sub up front (around £18 according to some back-of-the-hand maths).

It is an approach unheard of thus far. And while there are unquestionable risks inherent in committing to a 24-month contract, giving prospective customers an option where they are not forking out £450 at launch will be a tantalising prospect.

Microsoft have so far executed this plan as well as it possibly could have – gaming Twitter was a flurry of positivity after the reveal- but there remains a significant question mark over whether this is the right plan.

Game Pass has received plenty of plaudits for its breadth of choice, but whether subscription is the direction that the mainstream gaming audience will want to go remains to be seen. The dominance of subscription services in other entertainment mediums would suggest yes, but gaming has not always followed the same pattern as its TV or musical cousins.

And there is, of course, the question of the PlayStation 5. Where Microsoft are trying to disrupt the industry model through service, Sony seem to be playing a straighter bat. While it too will be releasing a cheaper (disc-less) version of its PS5 console at launch, its focus so far has seemed more traditional; highlighting its gilded first-party studio exclusives and touting a more significant step into the next generation. While it does have irons in the fire with cloud gaming and subscriptions, Sony hasn’t seemed to have shown the same appetite of building its gaming business around the idea.

To an extent: why should it? Estimates have the PlayStation 4 outselling the Xbox One at around two to one and Sony is widely recognised as having the superior exclusive line-up. Getting gamers to shift allegiance after a successful run is not an easy task and Sony may feel that too much disruption would not serve it well.

Still, the reaction to Xbox’s pricing strategy would have caused plenty of chin-stroking in the executive offices of Sony HQ. PlayStation’s initial riposte may be to undercut the ticket price of the Xbox -who knows?- but it may be keeping one eye on how the monthly contract idea plays out too.

The chances are that Sony can afford to wait it out a little longer than Microsoft. Xbox knows it needed to be aggressive to shift mindsets and further push Game Pass as the future of how we play games. An all or nothing gamble that could fall flat or disrupt the gaming industry entirely. Microsoft look to be making the right moves, at least. Now it is your turn, PlayStation.

Visit us at https://www.gamersoutpostllc.com/❤

Comments

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

This site uses Akismet to reduce spam. Learn how your comment data is processed.