Microsoft raises Xbox Live subscription rate

Data

Domestic Film DAILY

PROVIDED BY: Box Office

  1. 1

    Guardians of the Galaxy

    Daily Gross:$1.6M

    Cume to08.28.14: $258.3M

    Guardians of the Galaxy

    1
    Daily:$1.6M Cumulative:$258.3M Disney 3.68%
  2. 2

    Teenage Mutant Ninja Turtles

    Daily Gross:$1.1M

    Cume to08.28.14: $150.7M

    Teenage Mutant Ninja Turtles

    2
    Daily:$1.1M Cumulative:$150.7M Paramount Pictures -0.62%
  3. 3

    If I Stay

    Daily Gross:$1.0M

    Cume to08.28.14: $20.6M

    If I Stay

    3
    Daily:$1.0M Cumulative:$20.6M Warner Brothers / New Line -0.71%

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Marketplace

The cost of playing “Modern Warfare 2″ with friends on the Xbox 360 is about to go up. Microsoft announced Monday it would raise annual subscription rates for its Xbox Live service from $50 to $60 starting Nov. 1.

That’s the first price increase in Xbox Live’s eight-year history — and it’s a move that will affect more than just gamers in households. Microsoft has steadily added adding non-gaming functionality to the service in a bid to lure consumers who are looking for other entertainment options, including streaming of films and music.

The price increase is across the board. Beyond the bump to annual subscriptions, people buying a single month will now pay $10 instead of $8 and a three-month subscription will go from $20 to $25.

At present, more than 25 million people are Xbox Live members. The service is profitable and has become a very lucrative digital distribution hub for the company as well. Earlier this year, revenue for Xbox Live Marketplace exceeded subscription fees for the first time.

Xbox Live was the first gaming service to stream Netflix films. Microsoft also has deals in place with Last.fm for streaming music, as well as social media companies Facebook and Twitter. Earlier this year, it announced an alliance with Disney’s ESPN to stream 3,500 live and on-demand events to Xbox Live, ranging

from college football and basketball to soccer, major league baseball and NBA games. (Viewers will also be able to participate in polls and trivia contests as they watch the games.)

But its domination of those non-gaming elements has become shaky. Sony and Nintendo both offer Netflix today without any additional subscription fees. Sony is the only console that supports Hulu Plus (although Microsoft will add it to Xbox Live next year). And Sony also has invested in original programming for the PlayStation 3, offering it to all users free of charge.

Xbox Live will still have two tiers. The “silver” level membership — which gives people access to the service’s purchase and rental options, but doesn’t let them play online with friends or access non-gaming content — will remain free. The “gold” level, which is the most prominent, is the one affected by the move.

“Since launching Xbox Live in 2002 we have continually added more content and entertainment experiences for our members, while keeping the price the same,” said Larry Hyrb, director of programming for Xbox Live. “We’re confident that when the new pricing takes effect, an Xbox Live Gold membership will continue to offer the best value in the industry.”

Microsoft was the first gaming company to really focus on the online marketplace with the original Xbox. When it launched the Xbox 360 in 2005, that gave it a big head start over Sony and Nintendo. As those companies worked to get their multiplayer components up and running, Microsoft had already monetized its service. And the company quickly began to expand its focus.

While the non-gaming aspects of Xbox Live might have been seen as superfluous a few years ago, they’re now critical components in the gaming wars. Both Microsoft and Sony will introduce motion controllers later this year that are specifically meant to bring in the casual players that turned the Nintendo Wii into such a monster hit. The more options they can offer those players, the more they increase the odds of winning over fence sitters.

Ultimately, though, the majority of Xbox Live’s paying members use the service to play games. Multiplayer features are increasingly popular in the gaming world. And the increased depth of those features has been cited as one possible reason game software sales are lower for the second year in a row.

In April, Microsoft announced that more than 1.75 billion hours of online play have been logged since the release of “Modern Warfare 2″ — the equivalent of nearly 200,000 years.

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