Patrick T. Fallon/Bloomberg

Will Gamers Pay Three Times the Price for a Fancier Xbox Controller?

Microsoft is trying to create a “Maserati” for console gamers, who have traditionally been happy with a Hyundai

It's a lot to pay $150 for a game controller that can kill virtual aliens a few milliseconds faster. The Xbox Elite, announced last week at the E3 video game conference in Los Angeles, costs about three times as much as a standard controller—or nearly half the price of the Xbox One console itself, which comes bundled with a regular game pad.

At first glance, Microsoft's pricing strategy here seems hopelessly out of whack with what consumers are willing to pay. The $150 device, which comes out in October, has a “diamond rubber grip,” customizable buttons on the back, and levers and joysticks you can swap out. Oh, and a carrying case. But it looks pretty similar to its cheaper predecessor.

A standard Xbox One controller, which comes with the console.
A standard Xbox One controller, which comes with the console.
Photographer: Yuriko Nakao/Bloomberg

Serious gamers, who raved about the controller at E3, were able to look past the resemblance. The seemingly small changes make a big difference to players who spend hours a day mastering Call of Duty and Halo. By creating a product with premium materials and advanced features, Microsoft is trying to tap into a small segment of the gaming community that's willing to spend big on tools that might give them an edge on the digital battlefield.

This high-end niche hasn't really existed on consoles before. North American console gamers will spend more than $450 million in 2015 on game controllers, mostly for the standard fare, according to an estimate from research firm IDC. But PC gamers have shown a willingness for years to spend absurd amounts of money for mechanical keyboards and weighted mice.

With the Xbox Elite, Microsoft is trying to create a premium market among console gamers similar to the one that exists among PC obsessives. “They're going for a very specific audience that's relatively price insensitive as long as the quality is there,” says Lewis Ward, director of games research at IDC. “Think of it as the Maserati of standard game controllers.” About 20 percent of gamers are designated “hardcore,” meaning they spend at least 15 hours a week playing fast twitch games, according to Ward. They account for a higher percentage of revenue for game accessories because they demand the latest and best for any advantage they think they can get.

The new controller from Microsoft, which also works on Windows PCs, is the first attempt in this generation of consoles to sell add-on hardware to a premium class of gamers, Ward says. Past consoles have tried, usually unsuccessfully, to sell niche accessories. These were often specialized peripherals that only worked with a handful of games, such as plastic golf clubs, steering wheels, arcade-style joysticks, and a $200 contraption for the original Xbox that contained about 40 buttons, two joysticks and three foot pedals to simulate piloting a mech. Microsoft's Xbox Elite isn't going after the cheap add-on crowd. “I don't think they're going to sell a ton at the end of the day, but I don't think it's a bad bet overall,” says Ward.

A man holds Microsoft's Xbox Elite controller during the E3 expo in Los Angeles on June 16, 2015.
A man holds Microsoft's Xbox Elite controller during the E3 expo in Los Angeles on June 16, 2015.
Photographer: Patrick T. Fallon/Bloomberg

Console owners are the frugal, sensible constituency in the $20 billion games industry compared with the excess in the world of PC gaming. If you want to be a real PC gamer, the first thing you'll need is a computer. But not just any machine will do. Hardcore gamers typically shop at custom builders like Falcon Northwest, which specializes in machines that allow their customers to specify everything from $1,000 paint jobs to the color of the fluid in their liquid cooling system. A Mach V rig with some top components can easily run more than $10,000. Throw in a high-end monitor or two—as any real gamer would—and you're looking at the price of a brand new Kia Rio.

In the high-end computer accessories department, a Mad Catz R.A.T. 9 gaming mouse, which its manufacturer claims will give a 1 millisecond response time, will set you back $134, if you opt for the glossy paint job. The S.T.R.I.K.E. 7 customizable keyboard costs $252. There are even specialized computer desks designed for gamers. The Volair Sim Universal Flight or Racing Simulation Cockpit Chassis costs $660.

After looking at the premium market for PC game accessories, the Xbox Elite game pad might seem like a bargain. But as I've learned from testing high-end game equipment, none of the customizable buttons and millisecond-saving mechanisms has ever saved me from a rifle butt to the back of the head in Halo.

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