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Microsoft Seeks More Game Revenue From Add-Ons

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Microsoft has another source of income from its Xbox project — selling add-on features such as extra maps for $10 a pop. It’s a profitable business, but one which could alienate users by pushing the over-all price of games up to $80-100, reports Reuters. Microsoft Xbox Live group product manager Aaron Greenberg denied there was tension in the Xbox 360 online community over the charges, saying: “We are like the complaint department. We hear from the small minority that are not happy.” Simply not buying the extra add-ons is not an option for serious gamers, since they need the maps to play online competitions which are set up with them.

The complaints were reportedly set off by comments from Mark Rein, vice president of Gears developer Epic Games, who claimed that Epic wanted to give away the maps but Microsoft insisted on charging for them. An analyst quoted in the article estimates Microsoft gets $3 per download while the publisher gets $7, and that “the entire downloadable game content market is currently valued at $200 million, compared with $19 billion for overall game software sales last year”. However, the profit margin in a lot higher because the maps are easier and cheaper to produce than a whole game.

While I think there’s a definite benefit to providing extra content free to customers, I also doubt that many hard-core gamers are going to balk at another $10 as long as they don’t have to spend it too often. People who play the game several times a week will buy add-ons once they’ve finished all the maps, or if they’re online friends and competitors are playing on the new maps — something MS is banking on. The intent is probably to try and reduce the operating loss at the companies entertainment and devices division, which in the third quarter was $330 million on revenues of $974 million. As Reuters points out the balancing act is between increasing profit and alienating gamers, who won’t go anywhere straight away but if the costs keep rising may eventually “upgrade” to a different platform en masse.