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Daily Reaction: Celebrating 10 Years of Xbox Live

November 15, 2012 Written by Dan Oravasaari

On today’s joyous occasion of Xbox Live celebrating its 10th anniversary, the Daily Reaction crew of Dan and Seb look at the effect Microsoft’s online service has had on the games industry as a whole.

Dan: When the original Xbox released 10 years ago no one at the time really knew the effect it would have on the industry, and that it would be the leading force it is today. It released against one of the most successful consoles in history, the PS2, but Xbox Live was still able establish itself as a premiere service that could not be beat. Given that it also released during a time when less than 5% of US residents had broadband internet, it was quite a risky proposition for Microsoft. As that generation came to a close, Microsoft pushed ahead of the competition by releasing ahead and growing its ecosystem. As members realized the power of the XBL service, Microsoft’s 360 console grew in size and became an industry behemoth. This push of an online infrastructure forced Sony to move their brand into the online market far more aggressively, creating the PlayStation Network we use today.

While the PlayStation Network is not considered to be as robust and reliable as the XBL service, its origin is mostly due to the success of Microsoft’s online service. As Sony saw Microsoft push ahead to extend the features on their online service, they too began to add new features and even add things XBL have yet to do. With the idea that an online service for a gaming console extended beyond the ability to just play games over a network, and was more an integrated community, Sony added the online social hub Home, as well as the friend system for free. They tried to be the gaming social hub.

Seb: Absolutely, people may wonder what a look back at XBL is doing on a PlayStation-centric site, but it was fundamental in how quickly Sony moved forward with the PSN, and PlayStation as a whole. Microsoft had a huge head start because they brought their network out in 2002 with the Xbox, and Sony had to wait until 2005 with the PS3 to try and compete. Even then, they had nowhere near the level of experience or infrastructure, so they had to work hard to try to catch up.

The thing is, it’s incredibly important to Sony and Microsoft that you’re signed up to their network, their ecosystem. I’ve talked about the importance of ecosystems before, and how every entertainment company out there is now trying to get you hooked to their marketplace, but the fight between MS and Sony has been particularly fierce and important. Every purchase you make on XBL makes you more likely to stay on XBL, every achievement you earn is a time investment that encourages you to stay and, most importantly, every XBL player is likely to have gaming friends who he/she’ll want to play with, and so will pester them to buy a 360 instead of a PS3.

That was the genius of Xbox Live, and a core reason for why Microsoft was able to quickly overtake Sony in the US market. They brought out Halo 2, a fantastic, heavily marketed game with a strong multiplayer focus early in the ecosystem’s life and it cemented its success. They were able to continue with more Halos, as well as making the 360 the de facto CoD console. Sony tried to replicate that success with their own hunt for a Halo killer, with varying results.

As this console generation draws to a close, the number of active PSN and XBL user numbers are pretty close and their network offerings are very similar. Sony’s ecosystem is drawing level, so the question is, can they overtake MS next gen?

Dan: As we see a move toward digital content, the grasp an ecosystem will have over its members will only continue to grow, as consumers will have less physical ties to items, and more of one to their entertainment system. So as the next generation nears, the ability to close that gap will grow smaller and the lines will be more distinct than ever. Eventually as the market moves into cloud based streamed content, the proposition of physical content will become a mark in history and our attachments to the ecosystems will be at an all time high.

The benefit that Microsoft will have over Sony is ironically the biggest selling point for Sony’s online service, as XBL is a paid subscription service and PSN is a free service. Once both ecosystems move into a cloud format, they will be forced to have some form of subscription or paid membership plan. Given that Microsoft’s customers are already accustomed to paying for XBL’s service, while Sony’s customers are already accustomed to their current free to play model. So once the next generation gets here, the onus will really fall to Sony on how they will push their market of consumers who aren’t used to paying for their service, to finally invest in a paid service.

Seb: Yeah, it’s rather sad, but true. The fact that people have paid upwards of $500 over the course of 10 years simply to play online on Xbox is surely a negative, but it will help them going forward. Not only do they make nearly a billion a year simply from that charge, it also means a lot of people who have invested $500 don’t want to leave as it makes their investment almost feel worthless. It’s the problem with the human psyche.

And, like you said, those XBL customers won’t see a huge issue in switching to a paid cloud subscription, if that’s what’s used. But Sony is making huge inroads into the subscription system, clearly groundworking for the oncoming cloud, with the fantastic PlayStation Plus. Ignore any fanboyish beliefs you may have – it’s simply the best value proposition on any console, and it should build up a sizeable following over time.

Xbox Live helped spark the ecosystem gold rush among tech companies, and it forced Sony to invest heavily in PSN. Without it the PSN would not be as good as it is today, and even the most ardent of PS fans should look back at this day ten years ago and agree that it was incredibly important and incredibly beneficial to gaming as a whole. It was a monumental shift forward from local gaming to an online future, something that is only now starting to fully come into fruition.

Are you currently an XBL gold member? If so, how long have you been? If both Sony and Microsoft charged for their service, whose service would you choose? Let us know in the comments, or by calling us Xbots on Twitter at Seb and Dan.

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