40 Days #25: Set online play free across Xbox Live
Microsoft's big trump card in terms of competing with Nintendo and especially Sony is Xbox Live. In 2008, in order to combat Sony's recently improving luck, Microsoft will have to make some drastic improvements to their online service, so as to remind people that they still have something special that nobody else has.
The two basic ways of accomplishing this are introducing a host of massive improvements and making online play free. The latter really needs to happen this year, and not even primarily because Sony lets their gamers play for free.
No, the real reason why online gaming on Xbox Live needs to become gratis is the one segment of the gaming populace that Microsoft still doesn't seem to be able to snag: the casuals. The thing with online gaming is that it has become completely commoditized. Even simple little flash games offer leaderboards, gamer profiles, and sometimes actual online play. Then you have even more fleshed out online efforts like EA's Battlefield Heroes. Most (non-MMO) PC games have had free online multiplayer components for years. And, of course, both Sony and Nintendo allow free online play on both their home consoles and portables.
The way Microsoft needs to look at the issue is not in terms of earning subscription fees for letting people play against each other, but rather as a way to grow their customer base and snag that elusive casual segment. When you have a bunch of retirees in nursing homes across the country who want to play a card game on Thursday nights, you don't want to be charging them to play online. Same thing with a bunch of soccer moms who may want to play puzzle games online and talk about their parenting struggles. There are a ton of such scenarios, where casual gamers may want to hang out online socially, get together with relatives from far away, or with friends from across the country.
These aren't hardcore Halo 3 or COD4 players. These gamers would probably play Arcade games, or lighter mini-game fare. They could certainly eventually "graduate" to more full-featured games, but that isn't the point. These types of people see the all the free gaming taking place on the popular Wii, and it would be really hard to explain to them - gaming novices who don't have insights into the hardcore world - why they have to pay to play with a friend living a few towns over. However, opening up a nice new Xbox 360 console that comes with free online play for all would seem a lot more friendly to everybody involved.
Apart from drawing in all the casual players, universally leveling the (free) playing field for everybody would also make it easier for publishers to charge for premium experiences like MMO games. This has already been done with titles such as Phantasy Star Universe and Final Fantasy XI, but those games always looked like a rip-off to Xbox Live Gold members who were essentially charged twice to play them. With free online play, premium subscription services like these would seem priced more "naturally".
Giving away online gaming for free certainly wouldn't put Microsoft behind its competitors (just on par, in fact). It also wouldn't hurt the bottom line, if done right. Most web services these days (e-mail, file storage, picture galleries, etc.) give away the farm, but still make money from premium and add-on services. Of course, the Xbox Live Silver/Gold membership levels would have to be restructured, but Microsoft could also provide everything from more DLC for games to enhanced service quality and features. The hardcore gamers could easily spend enough money on the extra bits to essentially subsidize free gaming for everybody else. As a result, the community as a whole would benefit: more gamers would play online, buy more games, more content for them, influence more friends and family members to join the service, and buy more consoles. The install base grows, developers crank out more games, and quite possibly provide better multiplayer experiences, since they now know there are more gamers waiting to try them out without having to fear extra fees.