Xbox All Access may be a clever, long term play by Microsoft.
Earlier this week, Microsoft finally announced the long rumored Xbox All Access at last. For those of you who are curious about what that is, it is basically a plan where instead of spending money on the system upfront, you pay for it over a period of two years, by committing to remain subscribed to Xbox Live and Xbox Game Pass for that period. Monthly payments vary from $20-$35, depending on what model of Xbox you choose to get, but on the whole, this isn’t much different than buying a smartphone over a two year contract (although Microsoft’s pricing is far fairer). It’s something Microsoft has attempted once before with Xbox 360 (and Sega with Dreamcast), but that was a very limited rollout that went nowhere.
This time, it feels a bit different, though, especially given the confluence of circumstances from the last few years. It lines up with Microsoft’s own focus on services and trying to get subscribers for them- for the company, their hardware has just become a way to try and get more people subscribed to their services. Microsoft would, in that case, be all too happy to take a short term loss on their hardware to make it up over the long term with assured subscribers.
Here’s the other interesting thing, though- after the original Xbox One was weaker than the competition, Microsoft seems to have woken up to the fact that power has always been perceived to be a core part of the Xbox brand’s DNA, and that that is an advantage over Sony they can’t afford to relinquish again. This was most evident in terms of the Xbox One X, where they were willing to go all out to making it the most powerful console ever made- and now, the same team that worked on the One X is working on the next generation Xbox, reportedly codenamed Scarlett.
"A powerful and loaded to the gills next generation Xbox would be very expensive- the Xbox One X alone is $500, and even accounting for price drops, it means that a proper next gen system will be at least that much, a price that is prohibitively high for the mass market. "
A powerful and loaded to the gills next generation Xbox would be very expensive- the Xbox One X alone is $500, and even accounting for price drops, it means that a proper next gen system will be at least that much, a price that is prohibitively high for the mass market.
We have already heard how Microsoft plans to sidestep this to a degree- rumors regarding the Xbox Scarlet mention multiple SKUs, including a cheaper one which will primarily be for streaming games only, eschewing most local hardware. However, even for people who don’t want a gutted Xbox for themselves like that, and want the full experience, something like Xbox All Access could help.
Essentially, Xbox All Access allows Microsoft to sell a very powerful system for a reasonable upfront price, without taking much of a financial hit. Consider a supremely powerful next generation Xbox, for example, which costs $600 because of how powerful and loaded it is. That would ordinarily be the kiss of death- but an All Access style plan allows Microsoft to sell it for $200 upfront, with the other $400 covered for over two years via guaranteed subscriptions to Xbox Live and Game Pass.
Over the long term, of course, the amount paid to Microsoft will come to $600 or more, depending on the payment plan- but upfront, Microsoft can advertise “the most powerful system made” for $200. Assuming the next generation PlayStation is more powerful than Scarlett, Microsoft can still contain the damage by advertising their system for $200. North America, especially, is a market that is already used to using credit to buy things, and to long term payment plans for purchases ranging from homes, cars, to yes, smartphones. This is something the market could easily come to terms with, at least there.
"North America, especially, is a market that is already used to using credit to buy things, and to long term payment plans for purchases ranging from homes, cars, to yes, smartphones. This is something the market could easily come to terms with, at least there."
And therein lies the advantage Microsoft has potentially created for itself with the rollout of Xbox All Access: by introducing this plan now, getting early feedback, gauging market reactions, and making course corrections accordingly, not to mention normalizing the idea of a console paid for in this way now, they could roll out a far more palatable and ambitious plan with Xbox Scarlet at launch- allowing them to have their cake and eat it too. Basically: have a powerful console that does not compromise on anything; sell it for a mass market friendly price; don’t take a financial loss on it. That’s literally the dream scenario for any console vendor, but it is one that only Microsoft is positioned to pull off, especially since neither Sony nor Nintendo share the same extent of focus on services that Microsoft does.
Of course, we could see Sony attempt something like this too- they have PS Plus, PS Vue, and PS Now. That’s enough services to try and push something like this. But where Sony has missed the beat is in not getting ahead of the game on that front now. If this is something they want to do, they need to start doing it now, and normalize it, iron out the kinks with a relatively low stakes rollout for their current generation machines. They could leave it for next generation- and it may not go all that well, and they wouldn’t have the time to respond to it, since they would be doing things on the fly, unlike Microsoft, who would have had the chance to address whatever feedback they receive on it ahead of time.
Which brings me to the thesis- Microsoft’s potential genius here is in positioning themselves to delivering something that is palatable and beneficial to all parties involved, including especially their customers, but also themselves. Having a dedicated pool of subscribers for Game Pass would also, for instance, allow them to negotiate better with third parties regarding getting their games on the service. This is in addition to potentially being able to sell a powerful console for cheap- it’s an all around win.
Of course, this is all a hypothetical- Xbox All Access could go nowhere, and put a stop to this fantasy upfront. But for now, I am very curious to see how things play out.
Note: The views expressed in this article are those of the author and do not necessarily represent the views of, and should not be attributed to, GamingBolt as an organization.