XBOX 360 deal: $99 with 2-year Xbox Live Gold Subscription

By Erik Kain

Microsoft has confirmed rumors that it will be releasing a $99 Xbox 360. The console will come with a Kinect and a 4Gb hard-drive, as well as a two-year subscription to Xbox Live. Just like mobile phone contracts, anyone who sings up for the plan will pay a monthly fee ($15) and face a cancellation fee of $250 if they cancel their subscription before the contract is up.

As PCWorld points out, once you’ve figured in your subscription fees the entire package will cost you $459. You could save a pretty big chunk of money just buying everything upfront. If Microsoft releases its next-gen console in 2013, you might also get stuck with an out-of-date console subscription.

But I think this misses a couple of things. First of all, so what if the Xbox 720 comes out in 2013? Not everyone is an early adopter. Anyone buying an Xbox 360 in 2012 is by definition not an early adopter. If you’re buying an Xbox 360 now, you’re probably not the target audience for the next-gen consoles anyways. For these consumers, a 2013 launch date is hardly a problem.

 

Second, it may be more expensive over time to purchase the $99 Xbox 360, but you can spread those costs out over two years. For many people, $15 a month after the initial $99 is simply way more affordable than buying the system upfront, even if the eventual cost is higher. For many gamers with limited resources, the additional cost is offset by the convenience of spreading the payments out over time.

It’s actually quite brilliant if you think about it, and may be the future of console gaming. Microsoft and Sony both want their consoles to be more than simply gaming machines. They want to put full-featured home entertainment systems into your home, where you’ll listen to music, watch movies, and play games all from your Xbox or PlayStation. Right now, a big barrier to accomplishing that goal is the price-tag.

But wait – the price of an Xbox 360 or PS3 has come way down over the years. Why is this a problem?

Actually, it’s probably not anymore. Current-gen consoles are actually very affordable now. But when Sony launched the PS3 in 2006, the 20-gig model cost $499. That’s a hefty chunk of change for many people. With even more powerful and expensive hardware baked into next-gen consoles, one imagines that pricing is going to be a huge issue for console manufacturers. Finding the right price-point isn’t easy.

Subscription-based models solve several problems at once. They lower the financial barrier to owning a console for many gamers, but they also allow console manufacturers to launch next-gen consoles at a lower, but still profitable, price point. This isn’t such a big deal with current-gen hardware, but in a year or two it may be the answer.

I’m willing to bet that this $99 Xbox deal is as much a way to keep selling the soon-antiquated system as it is a test-ground for the next-gen Xbox. I’m also willing to bet that if it works, Sony will come up with its own similar deal. Which means that it’s quite possible subscription-based consoles are the way of the future. This could, theoretically, lead to other innovations.

For instance, right now consoles only upgrade their aesthetic design – the way they look, their size, etc. – and their harddrive capacity. This puts them at a natural disadvantage to mobile devices which upgrade constantly. With a subscription model, it’s possible that next-gen consoles could upgrade other features more regularly. People could upgrade to the upgraded version and get a discount by extending their subscription.

This might complicate game design. From a game development perspective, it’s nice to have a console with static specs. PCs vary widely in power and speed, but all Xbox 360s are essentially the same. Still, it’s possible that a new standard could emerge.

What do you think?

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About jedionston

Gavin "Dirk" Jedionston the "N" in "In N Out"

Posted on May 8, 2012, in LATEST ARTICLES and tagged , , , , , , , , , , , , . Bookmark the permalink. 3 Comments.

  1. Thing is, you spend more on contract.

  2. Your style is unique in comparison to other folks I
    have read stuff from. Thanks for posting when you have the opportunity, Guess I’ll just book mark this site.

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