Xbox Living

There’s quite a bit of talk going on about the new Silverlight-powered ads that are coming to the Xbox 360 Dashboard.  Xbox PR guy Major Nelson produced a blog post meant to calm everyone down by saying that the ads would be placed “organically” in the dashboard and would not interfere with the Xbox Live experience.

I’m not sure how that’ll work — I don’t care for clutter, so the only place to put them without being annoyingly distracting is in the middle of the content, which would be annoyingly annoying.  But let’s talk about that, shall we?

Ads for Gold Subscribers

The major complaint most people, including myself, has is that the ads will be shown to Xbox Live Gold subscribers, who are paying for subscriptions.  The obvious alternative is to show ads only to Silver subscribers, who aren’t paying (and can’t play online).

Here’s the math.  Microsoft claims that there are over 17 million Xbox Live subscribers, over 10 million of whom have Gold accounts, which are required to play online games.  Each of those Gold subscribers pay $49.99 U.S. a year for access to the service, if they purchase one year at a time — and nearly double that if they pay monthly.

If I’m capable of basic math, that’s in the neighbourhood of half-a-billion dollars that Microsoft is collecting from Xbox Live subscribers, if we assume a $50/year average.  That’s not counting money earned from Microsoft points purchased for downloads on the service, or for the games and console themselves.  Y’know… those things game makers used to profit from.

More profit is good profit

So, Microsoft, in its wisdom, has decided that $500 million is not enough money to supplement the money it already makes off of the actual console and its games and the things you can download off of the service.  Now, it wants to open up that 17-million user base as an advertising market.  As a business, that’s hard not to pass up.  After all, when you have millions gathered in one place, virtual or otherwise, it’s hard not to sell them something.

On the other hand, the online services for the PS3, Nintendo Wii, Nintendo DS and most PC games, most of which are not ad-supported, are all free.

Now before people start jumping up and down with the obvious retaliations, let me say two things:

• I’m no Xbox fanboy — I play on other platforms as well and I’m obviously OK with openly criticizing Microsoft.  But that said, I like Xbox Live better than any other online service that I’ve used.  The PS3 is less usable, I find, and the voice chat is nowhere near as good.  That’s an essential for online games, especially Battlefield titles, which I adore.  The Wii is not a great platform for most online games that I like, and doesn’t have much of a social networking aspect.  So, despite the fact that Xbox Live seems to be the only one charging for its service, I’m genuinely OK with paying for it.  It’s a premium service, so I pay a premium price.  More on that later.
• No, I’m not surprised that Microsoft is trying to make more money.  Of course, they’re a business.  I run a business, too. The mandate of a business is to make money for those that invest in it, and Microsoft certainly does what it can to fulfill that mandate.  However, annoying your customers is not a good long-term plan for making money, especially when you don’t have a monopoly.

So what?  Cable TV has ads.

Yes, it does.  What a brilliant observation.  And for that reason, TiVo and other DVR (or PVR) systems are becoming more and more popular. Many people now opt buy television programs on DVD rather than watch them when they are originally broadcast. Others download them from the Internet, often illegally, advertisement-free.  In other words, ads annoy people and when a viable alternative to watching them exists, people tend to choose it.

Yes, advertisements on cable television are something that we’ve all gotten used to.  That doesn’t mean that they don’t suck.  But, if the advertising money wasn’t there, cable TV would cost more.  After all, it costs money to produce the shows, and as consumers we’re only paying for general access to the service.

But that’s not the case with Xbox Live.  To play Xbox Live, you must have first purchased an Xbox 360 console, which currently ranges from $199.99 to $399.99 depending on the model you choose.  You also need to purchase games, which usually cost $59.99 when they’re new.  So, after you’ve spent at least $260 on a new console and game, you need to pay another $50/year, at least, to play online after the first free month expires.

For some of us, we’ve also invested time and/or money replacing our dead consoles (red ring!).  I’ve spent both, since my third Xbox 360 failed after my extended warranty was up, leaving me to buy a new console.

No sense in fighting it.

I’ve seen this response, too.  If you read the comments on Major Nelson’s blog post above, some people want to point out that advertising is everywhere anyways, and that there’s no use/sense/point in protesting these.  It won’t change anything.

But here’s what they’re forgetting: we’re the consumers.  We are the people on which the entirety of the business depends on.  Whether or not Microsoft “gets away” with this is our decision.  If we pay for a service full of ads, they’ll keep them there.  Maybe even add more down the road, testing that boundary.

If we all migrate to the PS3 or other platforms, well, that will be the end of it.

They will get away with it.

That’s my prediction.  We’re all going to make a fuss about it, like I’m doing here.  Microsoft will add the advertisements anyways, and enough people will be indifferent to it, or like the games enough, that they will put up with the ads and Microsoft will make its extra cash.

After all, we’ve made an investment in the console by purchasing it.  The alternative, if you don’t already own a PS3, is to spend more money — assuming you still want to play games.

Organic. Also, subtle. (OK, that one probably wasn’t fair.)

For now.

But in the next generation, will we forget about it?  Will Microsoft have muddied the Xbox brand with enough to make us buy a PlayStation 4 in the next generation?  Or will Major Nelson be right about the ads “enhancing” the service somehow?

It’s my opinion that jamming more ads in our faces — no matter how much you try to camouflage them, no matter how “organically” they are implemented, no matter how “enhancing” they’re meant to be — is only going to dilute the quality of the service.  Content is king.  When you try to make the ads the content, the content sucks. When the content sucks, nobody wants to buy it.

I said I’m happy paying for Xbox Live because it’s a premium service.  The things that make it that way are its cleanliness, its functionality (I see some complaining of Dashboard issues, but it works great for me), and its features.  It’s not bothersome to use.

But ads are a bother.  So much so that if another one of the consoles is able to fix up its system well enough to make it a better alternative to Xbox Live (Sony, I’m talking to you), these ads may make me an easy convert.

So listen up, Microsoft

I’m a Gold subscriber.  I’ve defended the Xbox 360 against its competition here.  I’ve recommended to friends that they choose the Xbox 360 over the PS3, and they’ve listened.  This blog is practically a free advertisement for the console and its many fine games.  I had my first Xbox 360 console fail three times. That’s frustrating, but I didn’t give up on it. When my warranty was up, I bought another console.  An Elite model, mind you.  I’ve praised the speed of the repair/replacement service when I had to send my fried Premium console in.  I buy downloadable content.  Microsoft, I’m one of your better customers.

I don’t want more ads on my Xbox Live Dashboard.  I want to play games.  That’s all I want to do.  Don’t sell me cars.  Don’t sell me clothes.  Don’t sell me food.  Don’t sell me anything that isn’t video games, and don’t be pushy about that, either.

Instead, you can make more money by making more games, expanding existing games, and generally producing actual content to sell me. That’s the stuff I like you for.  That’s the stuff I invite you to sell to me.  That’s the stuff I’m paying for.  And that’s the stuff I and other bloggers post happy things about, which helps you sell more games.  (You should have your Marketing and PR department pay your ad sales department to not sell ad space.)

Don’t sell my eyes to other people.  They’re not looking at your ads, and they’re not for sale.

I’m not paying you to look at ads, that’s stupid.