During a long and very interesting interview as part of the 400th episode of the Gamertag Radio Podcast industry analyst and crystal ball holder extraordinaire Michael Pachter expressed some very clear and rather interesting ideas on the inclusion of Kinect in every box of the Xbox One, and on what Microsoft should do to regain the ground they’re losing by pricing their console $100 more than their competition at Sony:
My Theory is, it was Don Mattrick’s idea to put Kinect in every Box. It was Don Mattrick’s idea to convince consumers to pay for it, and he isn’t there anymore.
So I think that the mentality of Microsoft is “we must win”, and I think they will not tolerate being in second place to PlayStation.
I think if Microsoft sees itself way behind, if they’re 30-40% behind Sony, they’re gonna wake up and say “This is not acceptable”.
I did talk with Mattrick back in February about the lifetime value of an Xbox One customer, and he said it’s about 2,000 dollars including all the Xbox Live and all the services they can sell you, all the downloads, and theoretically ultimately charging you for skype, for cable services and whatever else they’re gonna roll out in the next five years.
So what’s a hundred bucks if you don’t sell the device. Better to cut the price by a hundred bucks and sell the device.
But I had a conversation with the three-headed monster that’s running Xbox now, which is Phil Spencer, Mark Whitten and Yusuf Mehdi, the three guys that were on stage at E3. They asked me what kind of things I thought they should do to establish a greater value. I said “Give away Xbox Live for a year for free.” And they looked like I shot them.
Do you know how many people pay for Xbox Live right now? 20 million. Do you know how many Xboxes there are? 77 million. So there are 57 million people with an Xbox 360 who don’t pay for Xbox Live.
If you gave everybody Xbox Live free for a year, don’t you think that the number of paying customers after a year and a day would be more like 40 million?
I wouldn’t rule out Xbox Live being free for three months for everybody with an Xbox One. They gotta do something to make you feel like you’re getting your value. They put a headset in there. I’d bet you that by launch day you’re gonna see three months free of Xbox Live Gold, but they should give you a year.
I’d rather have a console and a hundred bucks than a console. That’s how most people look at it.
I don’t always ageree with what Pachter says, but this time around it’s really hard to disagree with him. If you want to hear the rest of the interview you should really head over to Gamertag Radio. It covers pretty much all the consoles on the market and it’s definitely worth listening to.