$99 Xbox 360 (with 2-year contract) launching supposedly next week?
The Xbox 360 might be getting a lot cheaper next week. The Verge claims that Microsoft will slash the price of the Xbox 360 4GB + Kinect bundle to $99 next week. Sweet deal, right? Wait, there’s a catch…It’s true, purchasers would be able to walk out of the store with an Xbox 360 + Kinect for $99, but first they’d have to sign up for a two-year contract. The package, which requires a $15 a month fee, is also rumored to include two years of Xbox Live Gold and streaming video content access. Also, the subscription bundle would only be available at the Microsoft Store, of which there are only 20 in the entire US.
It’s not exactly a super-amazing deal, but it does measure up pretty well with purchasing the separate components outright. A 4GB Xbox 360 + Kinect bundle and two years of Xbox Live Gold is regularly priced at $420 and the cost of the entire subscription would be $460. So the cost of a subscription system would only amount to an extra $40, provided you don’t incur an early termination fee.
Charge a subscription fee and give the console away for practically nothing,
But if the rumored Xbox720 is coming in next year wont this be a soulless purchase? Is it too late to buy a new Xob360 or is there still time?
1UP.com States their concern on the new selling point! Below..
1up article By: By Chris Pereira, 05/02/2012
Every videogame console manufacturer wants its system in the hands of as many people as possible. A larger install base means more people to sell games to, making it more attractive to publishers as a platform to bring games to, and both of those things equate to making more money. And with there now being many new ways of generating revenue -- Xbox Live subscriptions, downloadable content sales, dashboard advertisements -- it's easy to see why Microsoft in particular would be keen on making the Xbox 360 as desirable of a purchase as possible.
A price cut is one way to open up the system to a new market, although there are limits to the extent the price can be dropped -- not to mention a limit to how low Microsoft wants to take the price, given that it's selling better than the competition at its current price point. The company seems to have found a way to have its cake and eat it too, so to speak. The Verge reports Microsoft will make a 4GB Xbox 360 Kinect bundle available for only $99, albeit with a catch: It carries a two-year contract with a monthly fee of $15. Included with that fee would be a two-year warranty, a two-year Xbox Live Gold membership, "and possibly some additional streaming content from cable providers or sports package providers."
The cheapest 4GB Xbox 360 system currently available is $199.99; a 4GB Kinect bundle costs $299.99. An Xbox Live Gold subscription, after the price increase in late 2010, costs $59.99 on an annual basis, though you would pay more if you opted to pay every month or every three months (or less if you took advantage of a sale on a subscription card). Using these costs, you would ordinarily pay about $420 for this model of Xbox, Kinect, and two years of Xbox Live. This new, rumored contract plan would cost $360 in addition to the upfront $99 payment for a total price of $459.
If the idea of paying a fee for a device and then a monthly fee for the two following years didn't already sound enough like the standard mobile phone model, there will also be an early termination fee should you decide you no longer want to pay that $15 every month.
For hardcore gamers with disposable income, it obviously is not the way to go. But for those who can't afford the upfront cost and would rather not wait until they've saved enough money to be able to (nor does Microsoft want them waiting that long to hand their money over), it's a way to get $300 worth of hardware and access to Live while only having $100 in hand right now.
It's a brilliant business move by Microsoft. Hardcore gamers may view the Xbox 360 as being at the end of its life cycle, but there is a substantial market of consumers who will only buy a system once its price falls to within the neighborhood of $100. This contract may not be as attractive an option as a system that outright costs $100, but it's also a system that offers more functionality than those in generations past. Regardless, it opens the door for the system to be sold to a market that is not there when the price tag reads $200, $300, or more.
Keep in mind Microsoft is managing to do that without sabotaging its business of continuing to sell the system at its current price. Just as importantly, it isn't hurting the chances of the Xbox 360's successor doing well out of the gate. If the new system comes out in late 2013, it won't matter that a segment of consumers will still have months left on their Xbox 360 contract as people who are picking up an Xbox 360 this long after it was released are unlikely to be early adopters of the new system.
Unless, of course, Microsoft also makes that system available in a similar fashion. Should this prove to be a success, there's no reason why Microsoft would not provide a similar option for the 360's successor at some point, though perhaps not at launch. With the company presumably going to take a hit on sales of the system at its launch price, it may want to wait for costs to come down before doing so. Looking further into the future, it's not inconceivable to imagine Microsoft tying Xbox Live Gold in with the sale of every console in a fashion such as this, and Sony could follow suit with future models of the PlayStation. After all, if the model works for cell phones and a segment of consumers prove to be receptive to this first implementation, there won't be anything to stop these companies should they believe the inevitable backlash is only temporary.
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