A new rumor has emerged from the black stain on gaming, ResetEra, which claims that Microsoft is preparing to abandon paid subscriptions. The claim originates from Klobrille, who accordingly has connections inside Microsoft and will only speak on an issue if it is 100% guaranteed.
The content of the rumor is straightforward. It isn’t a question of if they will abolish the paid membership, but when.
Rumor Analysis: Most Likely
From a purely economic standpoint, Microsoft no longer needs to charge a monthly or yearly subscription for Xbox Live. The majority of video games are now sold digitally. Now keep in mind that statistic is because of Steam, but in 2019, Sony saw digital sales exceed physical for the first time in the console’s history. Albeit as a blip, not the norm.
On average, Sony sees between 30-40% of their sales be digital. Extrapolating that as the industry norm, as Sony has a large enough sample size of consumers for this to be done, we can presume Microsoft sees around the same ratio. For each of those digital sales, Microsoft levies a 30% retailers margin, allowing the company to very easily earn $60 membership costs.
It is in Microsoft’s best economic interest at this juncture to increase the adoption and use rate of their marketplace. The best way for them to accomplish this is to simply make it free.
With the membership dissolved, Microsoft can then replace it with GamePass and Xcloud. Alternatively, they can create a Pro-style membership that comes with extra discounts or access to special sales that would benefit both other publishers and Microsoft who would enjoy 30% of all transactions.
Not to mention this would be the perfect PR boost the Xbox Series X needs going into its launch. Microsoft has been undertaking a “You are the future of gaming,” campaign, and this would be a huge middle finger to Sony.
At this point, it is just a rumor, but from every conceivable angle, it makes sense for Microsoft to go through with it.