The remarkable scam that is Xbox Live

Xbox Live is an astounding, shameless money grab. (Logo via Wikimedia)

Microsoft: Corporate Greed 101:

 
Oh Microsoft, where do I start with you? After being screwed over mercilessly by Microsoft again (this time by Xbox Live), it finally came to me that Microsoft’s Xbox was not created to bring something to the table that other video game consoles lacked, but rather as a cash cow. It’s a genius move, when you think about it.

Fickr user Spoon Monkey’s Xbox (his second) with the “Ring of Death.” The red ring is the infamous sign that something’s not right with the Xbox.

First, you sell people a console for a couple hundred bucks each. Then you make them flimsy enough to break regularly so people shell out another couple hundred for a new console every few months. After that, you charge gamers $60 or $70 for the most buzzed about games out there. Then you make special editions, expansion packs and collector editions so you can easily rake in over $100 a customer per game. Then you hope that they don’t realize that a decent cable package comes with hundreds or thousands of hours of entertainment a month for roughly the same price of one of your overpriced games that they might only get ten hours out of (that’s if they bother to complete it at all). Perhaps the most insidious part, you sell gamers a bunch of useless cheap plastic and metal accessories at a huge markup almost all of which will soon be relegated to some corner in their basement or drawer in only a matter of weeks. 

You see that’s what has made the Nintendo and PlayStation arm of Sony profitable (and formerly Sega and Atari), but you don’t hit Microsoft’s nearly $78 billion in revenue just by building a shoddy imitation of other successful, highly polished products. You do that and go one step further. You find a way to make obscene amounts of money with your cheap knockoff in ways that others in the industry haven’t thought of yet. That’s true innovation.

Apple’s iPad with imitators Google/ASUS Nexus 7 and Microsoft Surface. Top left: iPad Mini Top right: iPad Bottom left: Google/ASUS Nexus 7 Bottom right: Microsoft Surface. (Image via Flickr/Compudemano)

Windows, for example, the knockoff of Mac OS, was licensed to a bunch of hardware companies to rake in billions, leaving Apple and Macintosh in the dust in the ’90s. Microsoft also knocked off the AppleWorks suite (Microsoft Office), the iPod (Zune), iPad (Surface), iOS (Windows Phone/Windows 8). Of course they didn’t just steal shamelessly from Apple, but others too including (but not limited to) AOL/Yahoo! (MSN), Google Search/Altavista (Bing/Live Search/Windows Live Search/MSN Search) and Palm (Windows CE) all with varying success. 
 
Gaming online:
 
With their cheap game console knockoff, Xbox, however, Microsoft went the route of charging customers for online services through a service called Xbox Live to pad their ridiculously large revenue income. The current incarnation of Xbox Live comes in two flavours, Xbox Live Free (formerly Xbox Live Silver) which strips away many of the consoles basic abilities such as playing online multiplayer, internet browsing (through Internet Explorer), Skype, YouTube, and SkyDrive just to name a few. To take advantage of these features, you need to pony up some cash for Xbox Live Gold, which works out to $10/month or $60/year. If your Gold membership ends, Microsoft rolls you back to Xbox Live Free, and your console virtually becomes a brick compared to what it was before. 

Without Xbox Live you can just about forget about streaming video on your Xbox. (Image via Microsoft)

The concept of paying month to month for specific console features was unheard of before Xbox and Xbox Live, but granted when Xbox Live made its debut, it was very rare to come across a video game console with Internet connectivity. Considering that, Microsoft might have been justified in charging a bit for the service, but today, not so much. 

Want to browse the web with a Wii, Wii U, DS or 3DS? No problem, there’s no extra

Original PlayStation 2 model with the Network Adapter which brought online gaming capabilities to the PlayStation 2. (Image via Wikimedia)

charge. Want to play against your friends on a PlayStation 2? All you need to do is pop on a Network Adaptor if you have the original model (or otherwise it’s built into the console), connect it up to the net and you’re good to go, no extra charges there either. The PlayStation 3 on the other hand had the PlayStation Network (perhaps the service most comparable to Xbox Live), and it provided access to YouTube, a web browser, Netflix, music and video content, voice and video chat, and yup, that was all free as well.

 
The Xbox Live Rewards scam: 
 
It seems as if with the competition from the PlayStation 3, which offered almost everything the Xbox 360 could do out of the box with no need for a subscription, Xbox customers were a bit jealous, perhaps they even considered jumping ship. So Microsoft’s Xbox team tried to appease their customers. Microsoft didn’t make their online content free (of course not, don’t be ridiculous, money is money after all). They instead threw in a few bonuses here and there. 

One of those bonuses in particular was Xbox Live Rewards. As you could assume by the name, Xbox Live Rewards is a reward system, but subscribing to Xbox Live doesn’t automatically put you in the rewards program, you have to specifically sign up for it (or else tough cookies, no rewards for you). Once you’re up and running with Xbox Live Rewards you collect credits that you can use towards new games or random stuff on the Xbox store. Sounds alright, doesn’t it?

The Xbox Live Rewards program is riddled with catches though. For example, one way to earn credits is if you refer a friend to upgrade from Xbox Live Free to Xbox Live Gold and if your friend upgrades from Xbox Live Free to Xbox Live Gold you and your friend both receive credits. That seems simple enough, or so I thought. 

As I recently jumped on the Xbox bandwagon (mostly only to play Grand Theft Auto V), I asked someone I knew to recommend me to upgrade to Xbox Live Gold so we could both get the credits. It looked as if this would be an opportunity to score a few easy credits to offset the sting of the almost necessary Xbox Live subscription. 

Despite the fact that I purchased an Xbox Live subscription, neither my friend nor I qualified for the credits. To find out why you have to look at the details in the fine print. Since I joined Xbox Live with a free one-month membership Xbox Live Gold membership that came with my console, I was technically an Xbox Live Gold member. If you remember from above, I had to be an Xbox Live Free member upgrading to Xbox Live Gold to qualify. Despite that, I was only an Xbox Live Gold member with a free month of service that was bundled with to console to see if I liked it, I didn’t qualify for any reward credits. You see Xbox Live Free and the one-month free trial of Xbox Live Gold are two different things but the one-month free trial of Xbox Live Gold and the paid Xbox Live Gold are considered the same for whatever odd reason. You could argue that I should technically be able to qualify because I did have a free membership of sorts, but that sounds more like something a lawyer would be able to determine.

Anyway, suppose in some alternate universe if they did allow people with the 30-day Gold membership to qualify for the credits, I still wouldn’t qualify as I used a prepaid card. If you dig deep in the Terms of Use it says that if you use a prepaid card to renew your membership, you wouldn’t qualify for the credits. Why so? No idea.

The Xbox Rewards site also says that they reward points for Gold membership renewals. I thought that if I renewed my membership I’d at least qualify for that, but because I was waiting for the Xbox Live Gold referral, which wouldn’t show up because now apparently it seems I didn’t qualify, I held off renewing my membership as long as I could. With only a few hours left until the deadline for renewal, I decided to renew it. 

However, I was dumbfounded to get an email from Microsoft saying that my Xbox Live Gold membership expired, and they were automatically changing my membership to Xbox Live Free hours before the membership was supposed end. So I immediately went to my Xbox and tried to upgrade my membership but during the process the Xbox crashed and when I rebooted it appeared that they already downgraded me to Xbox Live Free. Considering again that I needed to actually upgrade my membership from Xbox Live Gold I technically would not qualify for those credits on those grounds either. 

Before I found this all out, I decided to wait a bit to see if any of the credits would make it on to the account. I honestly then believed the problems I encountered with the credits were glitches, not a sophisticated scam pulled off by one of the world’s largest companies. With neither the Refer-a-Friend nor the Gold renewal credits appearing on the Xbox Live Rewards statement Microsoft emailed me, I decided to go to Xbox’s website to look for some support. The only apparent option that they have online for support is their forums, so with nowhere else to turn I swallowed my pride and posted my problem hoping that I wouldn’t look like an idiot in the process.

It was through the forum that I had the epiphany that this was a complete and total-rip off. Another user got back to me through the forum and informed me that I was SOL in regards to the Refer-a-Friend credits, and I personally discovered some additional loopholes by myself after some a deeper examination of the Xbox Live Rewards site. 
 
The PlayStation Network/PlayStation Plus element:
 
So now noticing that people have been shelling out cash for no good reason to get services that should be free in the first place, PlayStation decided back in 2010 to charge their customers for additional services with PlayStation Plus. Instead of chopping down the functionality of their consoles at the time, PlayStation Plus added to it (hence the name, I can only assume). It actually works out cheaper than Xbox Live in some circumstances the 12-month membership works out to being $49.99 compared to $60 for a comparable Xbox Live membership. (Their one-month memberships both work out to $10, however).

PlayStation Plus brought game demos, additional downloadable content for games, free games, dramatic discounts on the PlayStation Store and increased game save storage. PlayStation Plus also included downloads for 12 games just for being a member with games being cycled in and out from time to time. Xbox Live brought two free games a month, one members can download for the first half of the month and another for the last half. Missed the opportunity to snag the game when it was free? Too bad, hope you’re willing to pay for it now. 

Online multiplayer now requires a paid subscription to PlayStation Plus for the PlayStation 4. (Image via Wikimedia)

With PlayStation 4 though one core bit of functionality was pulled from PlayStation Network and added to PlayStation Plus: online multiplayer. During the PlayStation 3 era, and PlayStation Vita era (for mobile) it was free. This Xbox Live and PlayStation Plus thing is one of the few instances I can think of where competition between businesses actually made things worse for consumers. 
 
Paid subscriptions and the death of the console:
 
There you have it, early last decade it seemed that Microsoft brought online multiplayer gaming to home consoles through their Nintendo, Sega and PlayStation knockoff, Xbox, but in one of the rare instances where Microsoft brought something new to the world they single-handedly created and destroyed it at the same time. The online multiplayer experience for home consoles is dead in the water mostly due to their corporate greed and wanting to add even more cash to their billion-dollar empire.

The colossal flop Wii U is one of the few modern consoles that allows for multiplayer without a subscription. (Image via Wikimedia)

I suppose you could argue that free online multiplayer for the consoles isn’t a dead idea. Yes, you do have the option to fork over hundreds of dollars over the life of your console to keep it running, but there’s Nintendo’s offering, the Nintendo Network. It is still free but not as robust as either Xbox Live or PlayStation Network. Considering their Wii U console is a catastrophic failure, and it has a different philosophy in regards to gaming though, I doubt switching to Nintendo is an option most gamers would consider. Now with Xbox’s rival, PlayStation, toeing the additional console tax through PlayStation Plus, making it necessary for online multiplayer on the PlayStation 4, the game is essentially over.

One could argue that it all doesn’t matter; the home consoles are a dead already as most people do their gaming on tablets and phones these days. Perhaps Plus and Gold are their gasps to stay alive, but with games $60 each, pricey consoles and accessories, not to mention the big corporate powerhouses behind both Xbox and PlayStation, why do they need to tax gamers for them to take advantage of the fundamental tasks that a modern video game console should do? I think it’s just greed, and if these guys don’t play their cards right, they’re probably going to hasten the seemingly inevitable death of the home video game console, and that’s not good for anyone.
  
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