X-Box Live (Free)

[Erik Aston]

Comparing the online services is very interesting, because its one area where each company is testing out a different business model...

XBox Live--Gold is an expensive-to-implement centralized service paid for by subscriptions, with the free Silver providing access only to the stores. They'll also generate income from stores selling games, "microtransaction" game content, video and music. (Correct me if I'm wrong.)

PS Network--Though currently giving away the Jr. version of XBL Gold for free, they eventually plan to launch Home, an extremely-expensive-to-implement centralized service which supposedly will be paid for with advertisements. They'll also sell games, microtrans content, video and music.

Wii--No centralized service + friend codes + WiiConnect24 = cheap to implement. The online "channels" are also cheap to implement, and the VC, focused on amassing content but not features, is the only stream of income Nintendo will create with their online plan, and features only games, nothing else. Their struggle will be if people feel their services are simply not adequate.

I can say for certain that the model which WILL work is Wii's. The VC will make plenty of money to fund all the other services, and if it doesn't, they've got hardware profits, meaning they won't be scrambling. Even if the channels and the multiplayer are flops, they'll come out golden.

However, I think either Home or Live is going to have to change, and I think its more likely Home does. Sony is taking bigger losses already, as a company they can less afford to take those losses, and their service is going to be more expensive to implement. Even if advertisements produce enough cash to fund their online services, I think its likely they'll charge for Home anyways, because they need cash from every avenue possible. Only if Sony offer Home for free and its a hit will MS need to adjust.

But either way, it may be nothing more than mutually assured destruction. I think everyone agrees that the mass market customer doesn't want to be paying for online gaming even now, let alone 5 or 10 years from now. And I think we're destined to either have two pay-services, or two services which fail to produce enough revenue if not to pay for their own costs, then to offset other losses. If thats the case, Wii may end up being the most influential console in regards to online, simply because it doesn't try to develop a new business model, and is careful to be low-cost.