Xbox 360 Era Begins: A New Age of Gaming

Back in 2018, Microsoft transformed its Xbox Game Pass into an essential subscription by announcing that all its own games would launch directly into the service on day one. Widely celebrated as the best deal in gaming, the offer generated enthusiastic buzz and countless memes about its incredible value.

This week, however, a dramatic price increase has shifted the landscape. The premier Xbox Game Pass tier now costs $29.99 per month, totaling a substantial $360 annually, more than the original $299 price of an Xbox Series S. This change arrives as Microsoft raises console prices and promotes a $1,000 handheld, the Xbox Ally X.

What’s behind this new “Xbox $360 era”? Microsoft hasn’t provided a clear explanation, but many suspect the price adjustments are tied to its expensive acquisition of Activision Blizzard.

The 50 percent price jump has prompted many subscribers to reconsider the service’s worth. Microsoft did not introduce a cheaper annual plan to ease the transition, and lower-cost tiers lack the major benefit of day-one game releases. Some longtime supporters feel the company has shifted from attracting customers to extracting maximum revenue from them.

This year initially promised great things for Xbox and Game Pass, but recent moves have sparked a backlash. Retailer GameStop has openly mocked the brand, and frustration is widespread. Such a steep increase will likely trigger a wave of cancellations, especially since rising costs are already a leading reason people drop the service. Microsoft’s account management page has slowed significantly this week, possibly indicating a surge in cancellation attempts.

It’s easy to understand the frustration. With the Xbox Series X seeing a $150 price hike in just half a year, and Microsoft pushing the idea that any phone or laptop can serve as an Xbox, the platform’s direction feels increasingly uncertain.

Microsoft’s current challenges in gaming trace back to 2022. Early that year, the company committed $68.7 billion to acquire Activision Blizzard, a deal that fundamentally reshaped its gaming division. That same year, Microsoft set a bold target of reaching 100 million Game Pass subscribers by 2030, planning to expand its audience well beyond traditional consoles through studio acquisitions and broader content availability.

But the division’s momentum faltered later in 2022. High-profile titles like Starfield and Redfall were delayed, a situation Xbox chief Phil Spencer described as a “disaster” for Game Pass. A year later, the service saw its first price increase, and Xbox console prices rose in markets outside the United States.

When the Activision Blizzard deal finally closed in late 2023, pressure on Xbox’s profit margins intensified. Microsoft’s gaming unit now had to demonstrate that the massive acquisition could drive new growth, leading to cost-cutting measures and further price hikes.

Early 2024 brought widespread layoffs and studio closures. To increase revenue, Microsoft revealed plans to release some formerly exclusive Xbox titles on PS5 and Nintendo Switch. This signaled a strategic pivot to grow beyond Xbox hardware, and an implicit acknowledgment that Microsoft had effectively lost the console wars.

Game Pass inevitably evolved as well. After months of internal upheaval, Microsoft raised the price of Game Pass Ultimate and restricted day-one console game access to the priciest subscription tier, introducing a new “standard” plan. Even the popular $1 trial offer disappeared.

Now positioned as this generation’s underdog, Microsoft faces the financial weight of its expensive acquisition, tariff pressures on hardware, and a pressing need to boost earnings. A planned price increase on Xbox games was quickly reversed, leaving Game Pass Ultimate subscribers to shoulder the cost instead.

Microsoft is increasingly looking to PC and cloud gaming for expansion, but it’s raising the price of PC Game Pass just as it prepares to launch the Xbox Ally handhelds with Asus. The $1,000 price tag for the high-end Xbox Ally X tests consumer willingness to pay for premium portable consoles, and further adjustments to PC Game Pass seem likely. Microsoft didn’t mention the PC Game Pass increase in its recent announcement, but many expect it will eventually remove day-one releases for PC players, mirroring last year’s console changes.

Another notable detail in the new pricing structure is Microsoft’s promise that Xbox-published games will reach the more affordable Xbox Game Pass Premium tier within one year. Call of Duty titles are the major exception, remaining unavailable on Premium. If preorders for Black Ops 7 decline, especially with a new Battlefield game on the way, it could put additional strain on Game Pass, given Microsoft’s internal debates about the revenue impact of including Call of Duty in the service.

As Microsoft advances its Xbox Everywhere strategy, the transition to PC and next-generation hardware presents significant challenges. Everything about Xbox is transforming quickly, and the rising cost of hardware and subscriptions may push fans and retailers to explore other options.

In other Microsoft news, leadership changes are underway as the company refocuses on artificial intelligence. Windows teams have been unified again, with Pavan Davuluri, recently promoted to president of Windows and devices, now overseeing all Windows engineering. This reverses a 2018 decision to split the Windows team and means leaders for Core OS, Data Intelligence, Security, and Engineering Systems all report to Davuluri.

He stated in an internal memo, “This change will increase agility and simplify our end-to-end work across Windows + Devices, as we support over 1 billion Windows customers and deliver our vision of Windows as an Agentic OS.” This reorganization suggests the next major Windows release, whether called Windows 12 or something else, will heavily emphasize AI capabilities. While Microsoft may not mandate an NPU for the next version, many new features will likely perform best with that hardware.

AI continues to reshape Microsoft’s broader structure. CEO Satya Nadella is delegating some responsibilities to concentrate more on technical and engineering work. Judson Althoff, who led global sales for nine years, is now the CEO of commercial business, overseeing operations and marketing for corporate software and services, though not the engineering teams. After an eight-week sabbatical, Althoff’s expanded role surprised many who expected his departure. He still reports to Nadella, and the shift echoes past leadership transitions, such as when Bill Gates stepped down as CEO to become chief software architect.

Additional engineering teams are also being realigned. Groups responsible for Microsoft 365 collaboration and communication tools are moving from Rajesh Jha’s experiences and devices organization to Scott Guthrie’s cloud and AI division. Security teams handling identity, network access, and threat protection are transferring from the Microsoft Security division to Guthrie’s organization as well. The Azure Core team is absorbing certain groups from experiences and devices.

Microsoft is consolidating teams that manage sovereign and specialized clouds into one unit within the cloud and AI organization, led by Douglas Phillips. This consolidation is vital for Microsoft, as many lucrative enterprise and government contracts depend on Azure’s security capabilities. Phillips noted in a memo, “In a time of radical technological transformation and a high-threat landscape, it is crucial to continue bringing teams closer together to optimize how we operate.”

(Source: The Verge)