Why Microsoft Needs to Make Xbox More Netflix-Friendly

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The new generation of gaming consoles is only 6 months old, but so far Microsoft (NASDAQ:MSFT) has come up short against Sony (NYSE:SNE). The company wants to sell more Xbox One consoles, and to do that it will need to identify and remove as many obvious barriers as it can. One barrier Microsoft is on the verge of zapping, according to ArsTechnica, is the requirement to have a paid Xbox Live Gold account in order to watch content from Netflix (NASDAQ:NFLX), Hulu, and other media streaming apps on the Xbox 360 and Xbox One.

An Xbox Live Gold account costs $60 per year and is aimed primarily at gamers. By subscribing to the service, Gold members can play their games online,and download free games each month. Currently, though, Microsoft also locks Netflix, Hulu, and other streaming services behind the Gold paywall. The trouble for Microsoft is that neither Nintendo nor Sony require a paid account to access these video streaming services. So if a Netflix customer is looking to purchase a device to plug into his or her TV to watch content on, all things being equal, that person is more likely to pick a PlayStation 4 or Wii U. Other streaming media boxes, like the Roku and Amazon (NASDAQ:AMZN) Fire TV, also charge no additional fees for these features.

On the plus side for Microsoft, of course, is that it’s currently getting extra revenue from anyone who pays for a Gold membership to watch streaming media content, so it will be interesting to see how this decision — assuming it goes into effect — plays out.

Since the company would lose revenue from this decision, Microsoft probably has plans to make up the difference. One way it could recoup its losses would be to lock other services behind the Gold paywall, although that would seem counterproductive. It’s more likely that Microsoft will add new benefits to being a Gold subscriber.