Microsoft will reportedly next week release an Xbox 360 — Kinect and 4 GB hard drive included — that costs only $99 up front. There’s a catch, though: You’ll have to sign a $15 per month 2-year contract, which includes an Xbox Live Gold subscription and access to some additional streaming content.
This model is similar to the one used for smartphones; taken at cost, an iPhone or high-end Android phone would run for hundreds of dollars — more than most people are willing to pay up front. So a phone’s actual costs are subsidized by the monthly fees paid to the carrier over the duration of a 2-year contract.
The $200 down and $30-90 per month 2-year contract arrangement we take for granted when buying cell phones is arguably a bad deal for consumers. That’s true with this deal, also; a 4 GB Kinect-equipped Xbox 360 runs $300, and two years of Xbox Live Gold add up to $120 — that’s a total of $420. On the flipside, this subscription adds up to $460 — $40 more than the up-front cost, though it’s within the margin where interest and inflation rates make the comparative value uncertain.
But what really matters here is that this will open up new households to gaming and online streaming — households that can’t afford to throw $420 up front. With Microsoft planning to launch a new Xbox 360 music streaming service soon as well, we’re looking at one possible future for online media in the living room.