Netflix Price Increase? Xbox One Could Change the Game

The Netflix price increase is sad news. But if Microsoft's serious about the Xbox One as an entertainment hub, one big move could change its fortune.

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Millions of streaming TV and movie buffs groaned this week when the Netflix price increase was announced. The logic is sound: increase prices $1 to $2 per month to help underwrite the creation of new exclusive content. Hey, who doesn’t want the next House of Cards? But while millions of Netflix users bemoaned the price hike, a huge opportunity presented itself for Microsoft — presuming the company’s really serious about the Xbox One as an all-in-one entertainment device.

Netflix currently costs U.S. streaming subscribers $7.99 per month, a price that’s stayed the same since 2010. The Netflix price increase, according to the company’s statement Monday, will go into effect within the next few months.

What else happens in the next few months? A video game trade show called E3. The same trade show where Microsoft stumbled with its core-gamer messaging and unveiled a price for Xbox One that remains $100 more than the PS4. The Xbox One is lagging behind Sony’s PS4 in worldwide sales (7 million vs. 5 million), and price point is a huge reason why. Other than a packed-in Kinect sensor, there’s been little compelling reason to buy an Xbox One over a PS4 if you’re looking purely at cost.

Xbox Live Gold has also grown stale compared to Sony’s revamped PlayStation Plus, which offers multiple free games every month to paying subscribers. Put those together, and Microsoft’s at a bit of a crossroads as to how to rejuvenate excitement for its next-gen console.

With E3 coming up in June, and with the Netflix price increase set to go into effect about that same time, Microsoft needs to start justifying the Xbox One’s price premium. One way to do that: Microsoft should explore keeping Netflix subscriptions the current $7.99 price for Xbox Live Gold members alone.

Implementation would be brutal for both companies’ accountants. Messaging could be tough. Co-marketing could be a challenge. In other words, the idea’s a bit crazy. But crazy is just what Microsoft needs.

In the fall of 2012, Sony’s PS3 became the most popular device for streaming movies on Netflix. Last year when Microsoft took the wraps off Xbox One, the company acknowledged just how important streaming movies and TV is to the entertainment ecosystem. Microsoft was promptly and repeatedly bashed for its messaging and decisions, but the company’s logic — based on Sony’s own track record with Netflix streaming on PS3 — was sound.

Microsoft’s been in PR catch-up mode since stumbling out of the gate. First it unveiled the Xbox One as an entertainment device first and gaming device second. Then it announced (and reversed) an always-connected policy and no-used-games mantra. Now the company finds itself trailing the PS4 in worldwide sales, a position that led Xbox head Phil Spencer to say “We need to do more, that’s 100% of my focus.”

Well here’s “more,” Phil: put your money where your mouth is. You want Xbox One to be an entertainment device? You want to win some seriously positive PR? You want to show people why they should spend extra money for an Xbox One and Xbox Live Gold service rather than a PS4 and PS Plus? Make the Netflix price increase a non-issue for all XBL Gold members — on Xbox One only.

It would be gutsy. Brash. Rife with politics in light of the Crackle, Hulu and other streaming movie and TV apps on Xbox One and Xbox 360. But it would be a statement. A justifying line in the sand. And it could swing the sales momentum in Microsoft’s favor. Microsoft’s stated all along that the PS4 vs. Xbox One debate is a marathon rather than a sprint. That’s true. But even marathons have a first big kick, and bringing Netflix “into the Xbox One fold” would be a mainstream kick like few others.

What do you think? Would Netflix pricing staying flat on Xbox One be a game changer? Share your thoughts in the comments below.

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