FTC: Game Pass Price Hike is Microsoft 'Exercising Market Power Post-Merger' - News
by William D'Angelo , posted on 01 August 2024 / 4,783 Views
The Federal Trade Commission (FTC) of the US has posted a new filing saying the Xbox Game Pass price increase is the "consumer harm" it warned about when Microsoft was trying to acquire Activision Blizzard that was eventually completed in October 2023.
"Microsoft’s price increases and product degradation — combined with Microsoft’s reduced investments in output and product quality via employee layoffs — are the hallmarks of a firm exercising market power post-merger," reads the filing from the FTC.
"Product degradation — removing the most valuable games from Microsoft’s new service — combined with price increases for existing users, is exactly the sort of consumer harm from the merger the FTC has alleged."
The FTC added, "Microsoft’s price increases coincide with adding Call of Duty to Game Pass's most expensive tier, and discontinuing the Console tier will happen shortly before releasing CoD's newest game."
It stated that Microsoft previously promised "the acquisition would benefit consumers by making [Call of Duty] available on Microsoft’s Game Pass on the day it is released on console (with no price increase for the service based on the acquisition)."
The FTC concluded these actions by Microsoft "vindicate the congressional design of preliminarily halting mergers to fully evaluate their likely competitive effects, and judicial skepticism of promises inconsistent with a firm’s economic incentives."
Microsoft earlier this month announced a number of changes are coming to Xbox Game Pass.
The price for Game Pass Ultimate increased by $3 to $19.99 per month, while the price of Game Pass Core increased from $59.99 per year to $74.99 per year. PC Game Pass increased by $2 to $11.99 per month. Current members with recurring charges will see the new prices starting September 12, while the price increase has happened for new members.
A new Game Pass tier is being added that will replace Game Pass for Console called Xbox Game Pass Standard that will become available in the coming months. It will be available for $14.99 in the US.
Xbox Game Pass Standard, unlike Game Pass for Console, will include the ability to play online console multiplayer, as well as access to hundreds of games. However, it will not include games day one. Some games available day one via Game Pass Ultimate will be added to Xbox Game Pass Standard at a later date.
A life-long and avid gamer, William D'Angelo was first introduced to VGChartz in 2007. After years of supporting the site, he was brought on in 2010 as a junior analyst, working his way up to lead analyst in 2012 and taking over the hardware estimates in 2017. He has expanded his involvement in the gaming community by producing content on his own YouTube channel and Twitch channel. You can contact the author on Twitter @TrunksWD.
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Microsoft's overriding strategy has always been to gather enough power in any market they enter that they can dictate terms to consumers rather than the other way around. They typically begin this process by making themselves appear very consumer-friendly. When they judge that they have enough control that they can do what they want then they attempt to alter the industry to work in a way that benefits them unilaterally.
The US do not give a shit about their consumers. And their consumers do not want protections either, Americans are a funny bunch.
There's no such thing as consumer protection. There is only shifting who bears the costs of a thing.
Americans voice their concerns with their pocketbooks. It's the most powerful form of self-protection.
Didn't most countries approve the merger long before the US? Weren't many people on this website upset that the FTC tried to stop it?
Consumer protections and trade unions = Socialism = Communism = Anti-American. Yee Haw 'Merica baby!
Price increase was inevtiable, but locking day 1 games for Xbox users on gamepass ultimate was even worse
I never used Game Pass but the price hike is bullshit.
I know am gonna get a lot of slack for this but honestly I still think even with the new tier system I know not everyone can afford the £2 increase but for what you get day one literally one game covers that n if you don’t care about day one then go to the lower tier where you still get discounts on games. I understand why most would be annoyed though.
FTC is basically saying "we called this sh*t, now look how its turning out". So where is the consumer protection? if you knew this was going to happend, and now it has?
What consumer protection. Its A service that no one needs its not like its a utility. Meaning that if MS price the service outside of what consumers feel is worth the price they just do not sub. No one needs GP and MS on the other hand need everyone to sub to he service. Actually I have no clue what the FTC is talking about because a price hike for a service that require getting as many users as possible in order to be successful has nothing to do with MS ability to dictate price. It would be different if GP was the only place to play ABK games but that isn't even remotely the case.
Let's compare it to the competition...
Game pass:
- PC: US$11.99
- Hundreds of high-quality games on PC
- New games on day one
*Member deals & discounts -
EA Play membership
- Console (CORE): US$9.99
- Online console multiplayer
-
Catalog of over 25 high-quality games on console
*Member deals & discounts
- Ultimate: US$19.99
- Hundreds of high-quality games on console, PC, and cloud
- New games on day one
- Member deals, discounts, and Perks
-
EA Play membership
PlayStation Plus
- ESSENTIAL: US$9.99
- Monthly games
- Online multiplayer
- Exclusive discounts
- Exclusive content
*Cloud storage -
Share Play
- EXTRA: US$ 14.99
- ESSENTIAL
- Game Catalog
-
Ubisoft+ Classics
- PREMIUM: US$17.99
- EXTRA
- Classics Catalog
- Game trials
- PS5 Cloud streaming
-
Sony Pictures Catalog
What I see are similar options in many aspects, but the backwards compatibility of the XBox is better. One offers EA's service and the other offers Ubisoft's. Sony has the Sony Pictures Catalog, but Microsoft launches its games first party day one... I think Microsoft's Ultimate is better when the focus is on games and playing on multiple platforms, but Sony's Extra service seems better to me than CORE for those who only play on console. The FTC's argument once again is dumb, because:
-
prices for games and services are equivalent and have little variation;
-
the size of the games division (either by number of studios or revenue). In terms of revenue, the XBox division would be close to Sony or Tencent, while in terms of number of studios it is far from equal to Tencent or Embracer Group.
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Microsoft launches more multiplatform games than Sony and Nintendo.
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Exclusive agreements from third party studios with Microsoft are less aggressive than those that Sony makes.
I think that if the FTC wants to help users, then they should review the exclusivity policies with third party studios (ideally, it would be prevented), in addition, they should force console companies to open their ecosystems so that other stores can sell, that is, open to Steam, Epic, GOG and others so that they can sell on XBox and Playstation, as it would help put pressure on them to sell games cheaper, in addition, the game purchased in one store could be played on another device without having to buy it again . Will the FTC do something similar? No, because the world of business is darker than mere mortals can imagine... in the end it comes down to interests.
Comparing monthly prices doesn’t tell the full story as Sony and EA offer big discounts for yearly subs, and those yearly subs are often on sale at key points of the year. Xbox does neither, the sticker price is the price.
When you regulate something, it will never be based on promotional prices. XBox also has annual gift cards at excellent prices.
The yearly cost is always reduced, 12 months a year. 12 months of PS Plus extra is $134.99, a little over $11 a month.
Xbox Game Pass Core on Amazon 12 months: US$60, which would be US$5 per month
Xbox Game Pass Ultimate on Amazon 3 months: $45 or $180 per year, which would be $15 per month
https://www.amazon.com/Xbox-Game-Pass-Core-Membership/dp/B07TGNFVWV/ref=sr_1_1?crid=2GZS54U0H0JLX&dib=eyJ2IjoiMSJ9.nqUQgxIBFXFvtqWk2suvkCOD2dO4-k2l4ek1yZUJrvMzA6jRgKQaZKm2_Eg2BSGQgUOhqhmRhHV-5ku71hobR1U9YqRNGY26T9hyLahGxjF4AtcZDVgzyu9JwShE_Y6KGB82hLfAe2gIuOm4-xmRTQ.qZb00vc1NxtnbK9FtT3UrWlHV7syas52wmUE1ePahQo&dib_tag=se&keywords=xbox%2Bgame%2Bpass%2Bultimate%2B12%2Bmonth%2Bgift%2Bcard&qid=1721571087&sprefix=gift%2Bcard%2Bxbox%2B12%2Caps%2C220&sr=8-1&th=1
We can find cheaper gift cards if we look or wait for a good promotion, but I got them from a big store.
We’re not talking about gift cards from third party stores. You can go onto PSN any day of the year and buy a 12 month sub
You create arguments to try to pursue your theory, but in a globalized world I will buy where it is most beneficial. This argument of yours is a defense of monopoly, and that is something that I am horrified by.
The day that Microsoft or Sony exit the console business will be the day that console consumers will see absurd increases year after year. Once a company stands alone, it can do whatever it wants.
“ You create arguments to try to pursue your theory, but in a globalized world I will buy where it is most beneficial”
So the entire post you made to begin this discussion is completely useless then, right?
DEI is not the problem…
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