"As I've told our employees, our industry does not respect tradition," Nadella told analysts at its most recent quarterly earnings call. "It only respects innovation. This applies to us and everyone else."
Bingo: Xbox Live Gold is tradition for the sake of tradition. It needs to change, or go.
Still room for paid services
Why does Xbox Live Gold exist? Revenue, obviously. Live Gold allows Microsoft to subsidize everything from the consoles itself to the "Game with Gold" program.
Xbox Live Gold's list of services include the multiplayer gaming options, entertainment apps, Microsoft's video and music store, the ability to watch NFL games through the console with additional statistics, work out with the assistance of virtual trainers, and be matched up against opponents of your own skill with a service called SmartMatch. Gamers can upload replays or stream their gaming sessions via its "Game DVR" feature. As noted before, Skype and Explorer are part of Xbox Live Gold. There's also a "OneGuide" that replaces your TV provider's programming guide.
Rob Sanfilippo, who worked on Xbox Live before joining Directions on Microsoft, believes Microsoft needs to deploy a dashboard or another way of showing Xbox Live customers what they're paying for. "People think all Microsoft is doing is charging for Netflix," he said. "They forget all the other things that come with it."
"With Xbox Live Gold, our mission is to provide a premium games and entertainment service that you can't find anywhere else, one that offers interactive experiences that span across games, TV shows, movies, music, sports and Skype," a Microsoft representative said in a statement. "We are continually investing in the service in order to provide the best possible experience, and like other membership programs, we reward members with things like discounts and free content."
Microsoft also offers a free tier, historically referred to as "Xbox Live Silver," available on the Xbox 360 and One. It "includes access to a robust catalog of gaming content, movies, TV shows and more," the Microsoft representative added. "In certain regions, HDMI pass-through will enable you to watch live TV from your cable, telco or satellite set-top box through your Xbox One. You can also turn your smart device into the ultimate companion with Xbox SmartGlass."
Let's make some changes
Microsoft and users naturally hold differing opinions of what constitutes a free experience, and what might justify paying a few dollars per month for premium services. But given the competitive landscape and the corporate vision expressed by Elop and Nadella, I'd break it out this way:
Xbox Live (free tier): basic multiplayer gaming against random opponents, third-party entertainment apps, OneGuide, Internet Explorer, Skype, Xbox Video and Xbox Music.
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