backtop


Print 20 comment(s) - last by quiksilvr.. on Jul 11 at 12:55 AM

Revenue for downloads beat subscriptions for first time

Back when Microsoft first rolled out its Xbox Live network and charged gamers to play multiplayer games, many thought it was a mistake that would come back to haunt Microsoft. As it turns out, the decision to charge for Xbox Live was a great one by Microsoft making Xbox Live one of the only profitable parts of its gaming division.

Bloomberg reports that Microsoft has about 25 million users on Xbox Live as of the year ending June 30. About half those users coughed up the $50 yearly fee to play online games. With that amount of users paying for online gaming, analysts predict that Xbox Live broke the $1 billion revenue mark for the first time. 

Microsoft's Xbox COO Dennis Durkin told 
Bloomberg that revenue for downloads of TV shows and movies topped subscription revenue for the first time. Considering the $50 yearly fee multiplied by half that 25 million user number works out to $600 million, Durkins remarks suggest Xbox Live generated about $1.2 billion.

Analyst Matt Rosoff from Directions told 
Bloomberg, "Xbox Live has helped sell a lot of consoles and created a lot of loyalty. Everyone has been talking about Microsoft’s inability to innovate, but this is a pretty good example where they have innovated. They timed it just right with this one."

Despite the success of Xbox Live, many feel that Sony's PlayStation Plus offering has an uphill fight to match Microsoft's success. One example that illustrates this point is that there are 6 million gamers who play Halo on Xbox Live each month. Sony reportedly has under half that number of people playing all of its games available online each month.

Microsoft and Activision are the only two companies that are clearly successful in selling online gaming according to Activision CEO Bobby Kotick. Kotick said, "When it comes to online gaming, they’re the only significant alternative to us." Activision owns the Blizzard MMORPG World of Warcraft. Kotick also states that Activision wants a cut of the subscriptions from Xbox Live since its titles like Call of Duty are generating lots of money for Microsoft in subscriptions. He said, "We’re driving a lot of the subscription interest and certainly hours of game play."

Microsoft has continued to tweak and add to its Xbox Live service over the years to make it more appealing.  In June Microsoft offered up a Family Pack that is set to launch this November that will let users buy four memberships for the price of two at $100 per year. Microsoft did offer up bad news for gamers early this year that still played on their original Xbox consoles when it announced the discontinuation of the service for original Xbox.

With the success of Microsoft in selling online subscriptions for gaming, Sony has decided to try the same tactic. Sony announced PlayStation Plus at E3 this year. The cost per year will be $50, the same price that Microsoft charges.



Comments     Threshold


This article is over a month old, voting and posting comments is disabled

More than 6 millions?
By PsychoPif on 7/7/2010 1:10:24 PM , Rating: 3
quote:
Kotick also states that Activision wants a cut of the subscriptions from Xbox Live since its titles like Call of Duty are generating lots of money for Microsoft in subscriptions. He said, "We’re driving a lot of the subscription interest and certainly hours of game play."


Is it me or is Activision trying to cash on MS hard work? I could understand balancing the royalties on the game itself, but asking for part of a Live account price is un called for.

Soon we'll have extra fee for playing multiplayer game online...




RE: More than 6 millions?
By Hiawa23 on 7/7/2010 1:21:02 PM , Rating: 2
It is not just you, Activision clearly wants more of th pie which is surprising. Modern Warfare2 sold like 10-15mill copies. How greedy can you be.


RE: More than 6 millions?
By CptTripps on 7/7/2010 2:12:57 PM , Rating: 2
Yeah, I think they have a huge head. Besides that, MW2 just ruined online play for me with all the killstreak rewards. With the latest Battlefield BC2 I have not touched MW2 in months, I wish more would make the switch and punish those bastards for ruining a great thing. No more COD for me.


RE: More than 6 millions?
By StevoLincolnite on 7/7/2010 2:22:36 PM , Rating: 3
quote:
Is it me or is Activision trying to cash on MS hard work? I could understand balancing the royalties on the game itself, but asking for part of a Live account price is un called for.


If I was Microsoft I would say... "Sure, but you will have to make Call of Duty an exclusive Xbox title from now on!".


RE: More than 6 millions?
By Hiawa23 on 7/7/2010 2:42:54 PM , Rating: 1
Is it me or is Activision trying to cash on MS hard work? I could understand balancing the royalties on the game itself, but asking for part of a Live account price is un called for.

So, do they want royalties from Sony too, cause I did not buy my 360 back in 2005, or PS3 in 2006 to play COD, nor did I sign up for LIVE back in the Xbox1 era to play their games online, so how again do they figure they need a cut from MS?


"You can bet that Sony built a long-term business plan about being successful in Japan and that business plan is crumbling." -- Peter Moore, 24 hours before his Microsoft resignation

Related Articles













botimage
Copyright 2014 DailyTech LLC. - RSS Feed | Advertise | About Us | Ethics | FAQ | Terms, Conditions & Privacy Information | Kristopher Kubicki