Regarding the Xbox Live price bump

News broke this morning that prices for Microsoft's Xbox Live Gold service will be increasing as of November 1. Here are the specifics:

  • 1 month: $9.99, up from $7.99; approximately a 25% increase
  • 3 months: $24.99, up from $19.99; approximately a 25% increase
  • 12 months: $59.99, up from $49.99; approximately a 20% increase

This seems to be sparking some backlash among the masses of outspoken Xbox Live members because hey, it's always been $50 per year ever since Xbox Live launched in late 2002, right?

Right. But fifty bucks isn't what fifty bucks used to be. When you calculate the change in relative worth of the US dollar over time, you see something like this:

It turns out that, by just about any measure, $50 in 2002 is roughly equivalent in worth to $60 in 2010. And yes, you could potentially make the argument that Microsoft should be saving a lot of money through diminishing operating costs for maintaining a server infrastructure for machines that are now running five-year-old hardware. But there's also the valid counterargument that interface updates and access to new free services have helped to maintain a relatively consistent value for Xbox Live.

Is the price increase unexpected? Absolutely not. Microsoft's gearing up to integrate services like ESPN into its Xbox Live Gold service this fall, and that must have been an expensive deal between the two companies. But when you just take a look at the numbers, there's nothing controversial about this at all.